On Aug 13, Zacks Investment Research upgraded Everest Re Group Ltd. (RE) to a Zacks Rank #1 (Strong Buy).
Why the Upgrade?
Everest Re Group has been witnessing rising earnings estimates on the back of solid second-quarter results. Moreover, this property and casualty insurer delivered positive earnings surprises in the past 4 quarters with an average beat of 59.5%. The long-term expected earnings growth rate for this stock is 10%.
Everest Re Group reported second-quarter 2013 results on Jul 23. Operating net earnings of $5.10 per share were approximately 20% higher than the Zacks Consensus Estimate of $4.26 per share. Earnings were also up 20% year over year.
Earnings were primarily aided by solid top-line growth of 14.6%. The upside was driven by growth in premiums earned, which improved 11% year over year to $1.15 billion.
Underwriting income of Everest Re Group improved 25% year over year to $143 million. The combined ratio improved to 87.6% from 89.0% in the year-ago quarter. Everest Re Group spent $211.3 million to buy back 1.6 million shares.
Operating cash flow improved 22.6% year over year to $170.2 million in the second quarter. Book value per share increased 4.1% to $136.31 as on Jun 30, 2013 from $130.96 as on Dec 31, 2012. Return on equity was 16.1%, better than 15.3% in 2012.
The Zacks Consensus Estimate for 2013 increased 6.4% to $18.04 per share as 8 of 9 estimates were revised higher over the last 30 days. For 2014, 8 of 9 estimates were revised higher over the same time frame, lifting the Zacks Consensus Estimate by 4.8% to $17.25 per share.
Other Stocks to Consider
Among other property and casualty insurers, Berkshire Hathaway Inc. (BRK.A) (BRK.B), Global Indemnity plc (GBLI) and HCI Group, Inc. (HCI) also hold the same Zacks Rank #1 (Strong Buy) and look attractive.
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