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RLI Corp. Just Beat Analyst Forecasts, And Analysts Have Been Updating Their Predictions

As you might know, RLI Corp. (NYSE:RLI) just kicked off its latest quarterly results with some very strong numbers. It was a solid earnings report, with revenues and statutory earnings per share (EPS) both coming in strong. Revenues were 13% higher than the analysts had forecast, at US$445m, while EPS were US$2.77 beating analyst models by 84%. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.

Check out our latest analysis for RLI

earnings-and-revenue-growth
earnings-and-revenue-growth

Taking into account the latest results, the consensus forecast from RLI's five analysts is for revenues of US$1.68b in 2024. This reflects a satisfactory 5.7% improvement in revenue compared to the last 12 months. Statutory earnings per share are expected to fall 12% to US$6.44 in the same period. Before this earnings report, the analysts had been forecasting revenues of US$1.63b and earnings per share (EPS) of US$5.23 in 2024. There's been a pretty noticeable increase in sentiment, with the analysts upgrading revenues and making a great increase in earnings per share in particular.

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Althoughthe analysts have upgraded their earnings estimates, there was no change to the consensus price target of US$167, suggesting that the forecast performance does not have a long term impact on the company's valuation. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. There are some variant perceptions on RLI, with the most bullish analyst valuing it at US$175 and the most bearish at US$155 per share. With such a narrow range of valuations, the analysts apparently share similar views on what they think the business is worth.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the RLI's past performance and to peers in the same industry. It's pretty clear that there is an expectation that RLI's revenue growth will slow down substantially, with revenues to the end of 2024 expected to display 7.6% growth on an annualised basis. This is compared to a historical growth rate of 15% over the past five years. Compare this to the 124 other companies in this industry with analyst coverage, which are forecast to grow their revenue at 6.1% per year. Factoring in the forecast slowdown in growth, it looks like RLI is forecast to grow at about the same rate as the wider industry.

The Bottom Line

The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards RLI following these results. There was also an upgrade to revenue estimates, although as we saw earlier, forecast growth is only expected to be about the same as the wider industry. The consensus price target held steady at US$167, with the latest estimates not enough to have an impact on their price targets.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have estimates - from multiple RLI analysts - going out to 2025, and you can see them free on our platform here.

Even so, be aware that RLI is showing 3 warning signs in our investment analysis , and 1 of those is significant...

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.