RLI Corp. (RLI) Soars 4.4%: Is Further Upside Left in the Stock?

RLI Corp. (RLI) shares soared 4.4% in the last trading session to close at $113.82. The move was backed by solid volume with far more shares changing hands than in a normal session. This compares to the stock's 9.3% loss over the past four weeks.

RLI’s core business, Casualty, Property, and Surety, has witnessed significant growth over the past several years. The insurer remains well-poised for growth on the back of rate increases, expanded distribution base in personal umbrella and geographic expansion.

New opportunities in the inland marine space, growth within existing accounts and writing bonds with new customers should also benefit the insurer. Positive current accident year results and favorable development in prior accident years’ loss reserves are likely to benefit the underwriting results of RLI.

RLI is one of the industry’s most profitable P&C writers with an impressive track record of delivering 26 consecutive years of underwriting profitability. RLI has maintained a combined ratio below 100 for 26 consecutive years, averaging 88 and below 90 for 14 straight years.

This specialty insurance company is expected to post quarterly earnings of $1.02 per share in its upcoming report, which represents a year-over-year change of -6.4%. Revenues are expected to be $303.97 million, up 18% from the year-ago quarter.

Earnings and revenue growth expectations certainly give a good sense of the potential strength in a stock, but empirical research shows that trends in earnings estimate revisions are strongly correlated with near-term stock price movements.

For RLI Corp., the consensus EPS estimate for the quarter has been revised 3% higher over the last 30 days to the current level. And a positive trend in earnings estimate revision usually translates into price appreciation. So, make sure to keep an eye on RLI going forward to see if this recent jump can turn into more strength down the road.

The stock currently carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>

RLI Corp. is part of the Zacks Insurance - Property and Casualty industry. Everest Re (RE), another stock in the same industry, closed the last trading session 4% higher at $283.19. RE has returned -2.5% in the past month.

Everest Re's consensus EPS estimate for the upcoming report has remained unchanged over the past month at $9.31. Compared to the company's year-ago EPS, this represents a change of -36.4%. Everest Re currently boasts a Zacks Rank of #2 (Buy).

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