Endurance Specialty Up to Strong Buy on Promising Outlook - Analyst Blog
On May 22, Zacks Investment Research upgraded Endurance Specialty Holdings Ltd. ENH by a notch to a Zacks Rank #1 (Strong Buy).
Why the Upgrade?
Endurance Specialty witnessed rising earnings estimates on the back of impressive first-quarter 2015 results. Alongside, the pending acquisition of Montpelier Re Holdings Ltd. MRH cast a favorable outlook.
On May 4, Endurance Specialty reported first-quarter operating earnings per share of $2.03, which outpaced the Zacks Consensus Estimate by 41%. Additionally, this global property and casualty (P&C) insurer and reinsurer delivered positive earnings surprises in three of the last four quarters, with an average beat of 16.1%.
An improved top line, stable underwriting, prudent risk management and expense control primarily drove the bottom line. The company’s specialty business and balance sheet remains strong.
Moreover, the recent deal to acquire Montpelier Re is expected to boost Endurance Specialty’s underwriting portfolio and broaden its scale of operations, while also delivering annual cost savings worth $60 million. The merger also unlocks the company’s capacities within the business of insurance and reinsurance investment product management for third-party capital investors, thereby accelerating the growth momentum and enabling incremental shareholder returns. The $1.83 billion worth of deal is expected to culminate in third-quarter 2015.
Going ahead, the acquisition will immediately be accretive to earnings, operating return on equity, capital and invested assets. This coupled with favorable market trends should help mitigate operating and investment risks, overall instilling investor confidence in the stock.
Positive estimate revisions witnessed by Endurance Specialty also reflect optimism. The Zacks Consensus Estimate for 2015 and 2016 moved north by 4.8% and 1.3% to $6.53 and $6.38 per share, respectively, over the last 30 days. Furthermore, no downward revision in estimates has been witnessed for the respective periods.
Moreover, the Most Accurate estimate for Endurance Specialty’s 2016 earnings stands at $6.45 a share, resulting in an Earnings ESP of +1.1%.
Other Insurers that Warrant a Look
Apart from Endurance Specialty, other top-ranked insurers that appear quite promisingwitha similar Zacks Rankinclude Markel Corp. MKL and Universal Insurance Holdings Inc. UVE.
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MONTPELIER RE (MRH): Free Stock Analysis Report
MARKEL CORP (MKL): Free Stock Analysis Report
ENDURANCE SPLTY (ENH): Free Stock Analysis Report
UNIVL INSUR HLD (UVE): Free Stock Analysis Report
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