Should You Buy Employers Holdings (EIG) for Better Returns Now?
Employers Holdings’ EIG niche focus on low-to-medium hazard risk small businesses, prudent pricing, investment in technology, solid capital position and favorable growth estimates make it worth adding to one’s portfolio.
This mono-line writer of workers’ compensation (WC) insurance focused on low-to-medium hazard risk small businesses is well poised to capitalize on the growth opportunities offered by the $50 billion-plus market.
Zacks Rank & Price Performance
Employers Holdings currently carries a Zacks Rank #2 (Buy). In a month’s time, the stock has gained 1.2% against the industry’s decrease of 0.8%.
Optimistic Growth Projection
The Zacks Consensus Estimate for 2023 earnings is pegged at $3.35, indicating an increase of 14.3% on 20.5% higher revenues of $0.9 billion. The consensus estimate for 2024 earnings is pegged at $3.43, indicating an increase of 2.2% on 9.4% higher revenues of $0.9 billion.
Earnings Surprise History
EIG has a solid record of delivering an earnings surprise in the last five quarters.
Northbound Estimate Revision
The Zacks Consensus Estimate for 2023 has moved 6.3% north in the past 60 days, reflecting analyst optimism.
Business Tailwinds
EIG’s growth strategy aims at accelerating premium growth by expanding underwriting appetite while managing fixed expenses. The insurer thus is expanding its Employers and Cerity underwriting capacity.
The company boasts a solid track record of favorable reserve development leveraging disciplined underwriting,
In tandem with accelerated digitalization in the insurance industry, EIG stays focused on investing in technology and digitalization to scale up its business.
EIG’s financial flexibility is backed by a superior quality and highly liquid investment portfolio. Being a beneficiary of an improving rate environment, EIG should continue to enjoy the benefits of a solid investment portfolio.
The insurer pays regular dividends and increases the same. It also pays special dividends, reflecting operational excellence. Its current dividend yield of 2.8% is higher than the industry average of 2.3%.
Attractive Valuation
Employers Holdings’ shares are trading at a price-to-book multiple of 1.09, lower than the industry average of 1.82.
The company 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 (Strong Buy) or #2 offer better returns.
Before its valuation expands, it is advisable to take a position in the stock.
Other Stocks to Consider
Some other top-ranked stocks from the insurance space are Arch Capital Group ACGL, Axis Capital Holdings AXS and ProAssurance PRA. Each of these companies presently sports a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
Arch Capital’s earnings surpassed estimates in all the last four quarters, the average beat being 26.83%. The stock has gained 25.9% year to date.
The Zacks Consensus Estimate for ACGL’s 2023 and 2024 earnings indicates a 38.2% and 10.4% year-over-year increase, respectively. The expected long-term earnings growth is 10%. The consensus estimate for 2023 and 2024 has moved up 2.3% and 2.5%, respectively, in the past 30 days.
Axis Capital delivered a trailing four-quarter average earnings surprise of 9.75%. Year to date, the stock has gained 3.7%.
The Zacks Consensus Estimate for AXS’s 2023 and 2024 earnings indicates a 44.8% and 10.7% year-over-year increase, respectively. The expected long-term earnings growth rate is 5%. The consensus estimate for AXS’s 2023 and 2024 earnings has moved up 2.8% and 1.5%, respectively, in the past 30 days.
ProAssurance’s earnings surpassed estimates in two of the last four quarters while missing in the other two. Year to date, the stock has gained 5.7%.
The Zacks Consensus Estimate for PRA’s 2024 earnings implies a year-over-year rise of 143.5%. The consensus estimate for PRA’s 2023 and 2024 earnings has moved up 25.9% and 2.5%, respectively, in the past 30 days.
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Axis Capital Holdings Limited (AXS) : Free Stock Analysis Report
ProAssurance Corporation (PRA) : Free Stock Analysis Report
Employers Holdings Inc (EIG) : Free Stock Analysis Report
Arch Capital Group Ltd. (ACGL) : Free Stock Analysis Report
