Yahoo Finance Everest Re (RE) Gains 16% YTD: Will the Bull Run Continue?
Shares of Everest Re Group RE have gained 15.8% year to date compared with the industry’s increase of 3.8%. The Finance sector and the Zacks S&P 500 composite declined 13.6% and 18.1%, respectively, in the same time frame. With a market capitalization of $86.7 billion, the average volume of shares traded in the last three months was about 1.6 million.
New business growth, strong renewal retention, continued favorable rate increases and a solid capital position continue to drive this Zacks Rank #3 (Hold) insurer. RE has a decent history of delivering positive surprises in three of the last four reported quarters.
Return on equity (ROE), a profitability measure to identify how efficiently the company is utilizing its shareholders fund, has been improving over the last several years. Its trailing 12-month ROE of 7.5% is better than the industry average of 5.6%.
Everest Re has a VGM Score of A. This helps to identify stocks with the most attractive value, growth and momentum.
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Can RE Retain the Momentum?
The Zacks Consensus Estimate for Everest Re’s 2023 earnings is pegged at $40.91 per share, indicating a 75% increase from the year-ago reported figure on 13.6% higher revenues of $14.2 billion. The expected long-term earnings growth is 13.5%.
Everest Re, the seventh-largest global property and casualty reinsurer, remains focused on having a mix of product lines with better rate adequacy and higher long-term margins. Its diversified income streams ensure profitability. The insurer estimates gross written premium to witness a three-year CAGR of 10-15%.
The Insurance segment should benefit from new business growth, strong renewal retention and continued favorable rate increases. RE estimates gross written premium to witness a three-year CAGR of 8-22%.
The Reinsurance segment is poised to grow on partnerships with core clients and its position as a preferred reinsurance partner. RE estimates gross written premium to witness a three-year CAGR of crease 8-12%.
RE aims a low-90 combined ratio in 2023.
Everest Re boasts a strong capital position, with sufficient cash generation capabilities and benefits from capital adequacy, financial flexibility, long-term operating performance and traditional risk management capabilities.
This in turn helps in deploying capital for organic growth as well as pursuing strategic acquisitions apart from buying back shares and paying out dividends.
Everest Re’s dividend has increased at a nine-year CAGR (2014-2022) of 9.2%. RE targets a total shareholder return of more than 13% by 2023. Return on invested assets is projected between 2.75% and 3.25%, while the long-term debt leverage ratio is projected between 15% and 20%.
Stocks to Consider
Some better-ranked stocks from the property and casualty insurance industry are W.R. Berkley Corporation WRB, Berkshire Hathaway (BRK.B) and American Financial Group, Inc. AFG. While W.R. Berkley sports a Zacks Rank #1 (Strong Buy), Berkshire Hathaway and American Financial carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The bottom line of W.R. Berkley surpassed earnings estimates in each of the last four quarters, the average beat being 25.63%. In the past year, the insurer has gained 26.9%.
The Zacks Consensus Estimate for W.R. Berkley’s 2022 and 2023 earnings has moved 5.1% and 2.4% north, respectively, in the past 30 days.
Berkshire Hathaway delivered a four-quarter average earnings surprise of 22.18%. In the past year, Berkshire Hathaway has gained 9%.
The Zacks Consensus Estimate for BRK.B’s 2022 and 2023 earnings implies a respective increase of 15% and 6.2% from the year-ago reported number.
American Financial’s earnings surpassed estimates in each of the last four quarters, the average beat being 28.16%. In the past year, American Financial has lost 0.4%.
The Zacks Consensus Estimate for AFG’s 2022 and 2023 earnings has moved 0.6% and 1.8% north, respectively, in the past seven days.
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