On Mar 15, we upgraded XL Group plc (XL) to Outperform based on its strong fourth-quarter performance and continued efforts to enhance shareholder value. This property and casualty insurer presently carries a Zacks Rank #1 (Strong Buy).
Why the Upgrade?
XL Group’s fourth-quarter 2012 earnings came in at 13 cents, well above the Zacks Consensus Estimate of a loss of 35 cents per share. Revenues increased 1.9% from the year-ago period to $89.5 million, easily surpassing the Zacks Consensus Estimate of $1.7 billion. Over the past four quarters, XL Group has delivered an average surprise of 54.2%.
XL Group witnessed upward estimate revisions following its earnings release. The Zacks Consensus Estimate for 2013 inched up 4.1% to $2.54 as 4 of 16 estimates were revised higher over the last 30 days.
Why the strong positive bias on the company? With a strong international exposure and a diversified suite of product offering, we believe that the company is well positioned to write higher premiums fueling top-line growth, going forward.
The board of directors approved a $850 million share repurchase program along with a 27% hike in its quarterly dividend, which will further boost the bottom line.
The long-term expected earnings growth rate for this stock is 9.4%.
Other Stocks to Consider
Apart from XL Group, other stocks in the property and casualty sector that are currently performing well include Arch Capital Group Ltd. (ACGL), Cincinnati Financial Corp. (CINF) and EMC Insurance Group Inc. (EMCI). All these companies carry a Zacks Rank #1 (Strong Buy).
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