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AXIS Capital (AXS) Rallies 17% in a Year: More Upside Left?

Shares of AXIS Capital Holdings Limited AXS have rallied 17.1% year to date against the industry’s decrease of 4.8%. The Finance sector and the Zacks S&P 500 composite declined 15.5% and 18.9%, respectively in the same time frame. With a market capitalization of $17.6 billion, the average volume of shares traded in the last three months was 1.2 million.

Zacks Investment Research
Zacks Investment Research


Image Source: Zacks Investment Research

The repositioning of portfolio and markets offering profitable growth, lower volatility, strong market presence, better pricing, margin expansion and effective capital deployment continue to drive this Zacks Rank #1 (Strong Buy) insurer. AXS has a solid history of delivering positive surprises in the last nine reported quarters.

AXIS Capital has a VGM Score of B. This helps to identify stocks with the most attractive value, growth and momentum.

The Zacks Consensus Estimate for 2022 and 2023 has moved 5.8% and 6.8% north, respectively in the past 60 days, reflecting analysts’ optimism.  

Return on equity was 11.8% in the trailing twelve months, better than the industry average of 5.7%. AXIS Capital eyes a low-90s combined ratio to fuel attractive ROE.

Can AXS Retain the Momentum?

The Zacks Consensus Estimate for AXIS Capital’s 2022 earnings is pegged at $6.41, indicating a 25.2% increase from the year-ago reported figure on 2% higher revenues of $5.3 billion. The consensus estimate for 2023 earnings is pegged at $7.03, indicating a 9.7% increase from the year-ago reported figure on 9.8% higher revenues of $5.8 billion.

The expected long-term earnings growth is pegged at 5%.

AXIS Capital has been growing its business lines, which are likely to provide a solid double-digit return on equity opportunities. Its pet insurance, marine cargo, cyber and renewable energy insurance businesses are in sync with its growth strategy.

The rate increase, prudent underwriting and PML reductions supported by third-party capital are likely to aid AXS in improving risk-adjusted return. These in turn should drive margin improvement.  AXIS Capital expects disciplined pricing to continue in both insurance and reinsurance through 2023.

AXS has made investments in technology in sync with the accelerated digitalization in the insurance industry. These should help the insurer in effective usage of data, aid higher-value processes and activities, support new lines of business and enable efficient operations.

Axis Capital has an impressive dividend history, boasting one of the highest dividend yields among its peers. It hiked dividends for the last 18 years at a nine-year CAGR (2014 – 2021) of 5.3%, driven by solid earnings. Its dividend yield is currently 3.3%, way above the industry average of 0.4%.

The insurer also has a $100 million share buyback program through 2022 under its authorization.

WRB has a Value Score of B. This style score helps find the most attractive value stocks. Back-tested results have shown that stocks with a Value Score of A or B combined with a Zacks Rank #1 or #2 (Buy) offers better returns.

Other Stocks to Consider

Some other top-ranked stocks from the insurance industry are Berkshire Hathaway (BRK.B), American Financial Group AFG and Arch Capital Group ACGL, each sporting a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Berkshire Hathaway’s 2022 and 2023 earnings implies 14.4% and 5.9% year-over-year growth, respectively. The average four-quarter surprise is 17.55%.

The Zacks Consensus Estimate for BRK.B’s 2022 and 2023 earnings has moved 7.6% and 8.8% north, respectively, in the past 60 days. Year to date, shares of BRK.B have lost 6.7%.

American Financial’s earnings surpassed estimates in the last four quarters, the average earnings surprise being 37.09%.

The Zacks Consensus Estimate for AFG’s 2022 and 2023 earnings has moved 1% north each in the past 30 days. Year to date, shares of AFG have lost 5.2%.

The Zacks Consensus Estimate for Arch Capital’s 2022 and 2023 earnings implies 29.6% and 18.1% year-over-year growth, respectively. The average four-quarter surprise is 33.64%.

The Zacks Consensus Estimate for ACGL’s 2022 and 2023 earnings has moved 9.2% and 7.2% north in the past 60 days, respectively. Year to date, shares of ACGL have increased 6.8%.


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