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Here's Why AXIS Capital (AXS) Fits the Hold Approach for Now

Zacks Equity Research
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Estimates for AXIS Capital Holdings Limited AXS have been revised upward over the past 60 days, reflecting analysts’ confidence in the stock. The stock has seen the Zacks Consensus Estimate for 2018 move nearly 21.1% north to $4.77 and 1.2% for 2019 to $5.09.

Shares of this Zacks Rank #3 (Hold) specialty lines insurance and treaty reinsurance service provider have gained 10.5% year to date, outperforming the industry’s growth of 7% and the Zacks S&P 500 Composite’s increase of 7.8%.



AXIS Capital’s continued focus on its Specialty Insurance, Reinsurance and Accident and Health bode well for long-term growth.

Let’s take a look at the factors that make AXIS Capital a stock worth holding on to.

Sturdy Top Line: Banking on the strength of increasing net premiums earned and improving net investment income, the company has seen a 9.4% rise in its top line over the last five years.

Sustained solid performance at Axa syndicate 1686 and AXIS Capital's syndicate at Lloyds, expanding capabilities for AXIS Ventures, re-entry into U.S. primary casualty, and weather and commodities business and improving accident and health business should help to keep the revenue momentum alive for AXIS Capital.

Efforts to Capitalize on Opportunities: Co-sponsored with Blackstone, the launch of Harrington Re will give AXIS Capital a broad range of third-party capital capability to develop customized solutions for clients and brokers. The insurer regularly invests in accident and health business, renewable energy, cyber, agriculture reinsurance and mortgage reinsurance to enhance portfolio mix and improve underwriting profitability.

Compelling Inorganic Growth Story: AXIS Capital pursues buyouts to accentuate its growth profile. The takeover of Novae Group plc in 2017 has made AXIS Capital one of the top 10 insurers at Lloyd. Meanwhile, the Aviabel acquisition helped the company boost its airline business.

Prudent Capital Management: AXIS Capital has a solid capital management policy in place, with regular dividend hikes and share buybacks. The company has made 13 consecutive dividend hikes banking on sturdy earnings. Its dividend currently yields 2.8%, better than the industry average of 0.5%.

The company intends to pay back at least 200% of its six months’ operating earnings to investors. These endeavors make the stock an attractive pick for yield seeking investors.

Growth Projections: The Zacks Consensus Estimate for current-year earnings per share is pegged at $4.77, representing a year-over-year surge of 251.4% on 15.2% higher revenues of $5.2 billion.

For 2019, the Zacks Consensus Estimate for earnings per share stands at $5.09, reflecting a year-over-year increase of 6.6% as revenues rise 2.1% to $5.4 billion.

AXIS Capital has an expected long-term earnings per share growth of 8.5%.

Stocks to Consider

Some better-ranked property and casualty insurance stocks are Alleghany Corporation Y, The Progressive Corporation PGR and The Allstate Corporation ALL, each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Alleghany provides property and casualty reinsurance and insurance products in the United States and internationally. It came up with an average four-quarter beat of 17.61%.

Progressive Corporation provides personal and commercial auto insurance, residential property insurance and other specialty property-casualty insurance and related services, primarily in the United States. It pulled off a four-quarter average beat of 9.19%.

Allstate engages in property and casualty insurance, and life insurance businesses in the United States and Canada. It delivered an average four-quarter beat of 41.84%.

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