Chubb (CB) Shares Rise 21% in 6 months: Will the Bull Run Stay?
Chubb Limited’s CB shares have gained 21.3% in the past six months, outperforming the industry’s 15.7% growth. The Finance sector and the S&P 500 Composite have grown 17.8% and 19.3%, respectively, in the said time frame. With a market capitalization of $104.9 billion, the average volume of shares traded in the last three months was 1.7 million.
A compelling portfolio, strong renewal retention, positive rate increases, strategic initiatives to fuel profitability and solid capital position continue to drive this Zacks Rank #3 (Hold) insurer. Return on equity in the trailing 12 months was 16.5%, better than the industry average of 7.3%.
This insurer has a decent history of delivering an earnings surprise in the last four reported quarter, the average being 23.44%.
Earnings of this insurer grew 19.4% in the last five years, better than the industry average of 10.4%. The expected long-term earnings growth rate is pegged at 10%.
Also, return on invested capital (ROIC) has been increasing over the last few quarters amid capital investment made over the same time frame, reflecting CB’s efficiency in utilizing funds to generate income. ROIC in the trailing 12 months was 10.6%, better than the industry average of 5.6%.
Image Source: Zacks Investment Research
Can CB Retain the Momentum?
Chubb’s growth strategy encompasses increasing focus on capitalizing on the potential of middle-market businesses (both domestic and international), and enhancing traditional core packages and specialty products. The insurer has been making investments in various strategic initiatives that pave the way for long-term growth. It is focusing on cyber insurance that has immense room for growth.
Chubb’s inorganic growth story impresses as the insurer pursues mergers and acquisitions that diversify its compelling portfolio, add capabilities, expand geographic footprint and add synergies. The addition of Cigna’s life and non-life insurance companies, acquiring more stake in Huatai Group, among others, bear testimony to the strategy.
Acquisitions have improved premium revenues, the major component of an insurers’ top line. Premiums should also benefit from commercial P&C rate increases, new business and strong renewal retention.
Improving operating cash flow, coupled with a better rate environment, is likely to aid investment income to grow. Management estimates investment income to be $1.45 billion and continued growth thereafter.
CB has an impressive dividend history that also set stage for 31st year of dividend hike. The board will propose a 5.8% hike at its annual meeting.
CB has a dividend yield of 1.3%, better than the industry average of 0.3%. This makes the stock an attractive pick for yield-seeking investors. It also has $5 billion remaining under its share buyback authorization.
Stocks to Consider
Some better-ranked stocks from the same space are Axis Capital Holdings AXS, The Progressive Corporation PGR and Palomar Holdings PLMR, each sporting a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Axis Capital delivered a trailing four-quarter average earnings surprise of 102.57%. The stock has gained 10.9% in the past six months.
The Zacks Consensus Estimate for AXS’ 2024 and 2025 earnings indicates an increase of 3.1% and 10.1% from the year-ago levels, respectively. The expected long-term earnings growth is 5%. The consensus estimate for 2024 and 2025 earnings has moved up 0.5% and 0.1%, respectively, in the past 30 days.
Progressive’s earnings surpassed estimates in two of the last four quarters while missing in the other two. The stock has gained 44.4% in the past six months.
The Zacks Consensus Estimate for PGR’s 2024 and 2025 earnings implies a rise of 30.7% and 12.6% from the prior-year levels, respectively. The expected long-term earnings growth rate is 22.3%. The consensus estimate for PGR’s 2024 and 2025 earnings has moved up 5.5% and 4.4% respectively, in the past seven days.
Palomar delivered a trailing four-quarter average earnings surprise of 11.23%. The stock has gained 58.2% in the past six months.
The Zacks Consensus Estimate for PLMR’s 2024 and 2025 earnings implies a rise of 16.3% and 18% from the year-earlier figures, respectively. The consensus estimate for PLMR’s 2024 and 2025 earnings has moved up 1 cent and 2 cents respectively, in the past seven days.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Chubb Limited (CB) : Free Stock Analysis Report
Axis Capital Holdings Limited (AXS) : Free Stock Analysis Report
The Progressive Corporation (PGR) : Free Stock Analysis Report
Palomar Holdings, Inc. (PLMR) : Free Stock Analysis Report
