Everest Group (EG) Stock Rises 10% YTD: More Upside Left?
Everest Group, Ltd. EG shares have gained 10.1% year to date (YTD) against the industry decrease of 7.8%. The Finance sector has risen 6.5% in the said time frame. With a market capitalization of $15.8 billion, the average volume of shares traded in the last three months was 0.3 million.
New business growth, strong renewal retention, continued favorable rate increases and a solid capital position continue to drive this Zacks Rank #3 (Hold) insurer.
The insurer’s earnings have grown 16.6% in the past five years, outperforming the industry average of 5.9%. EG has a solid surprise history, beating earnings estimates in three of the last four reported quarters, the average being 17.36%.
Return on equity (ROE), a profitability measure to identify how efficiently a company is utilizing its shareholders' fund, has been improving over the last several years. EG’s trailing 12-month ROE of 14.9% is better than the industry average of 10.8%.
The insurer targets total shareholders return of more than 13% in 2023.
Image Source: Zacks Investment Research
Will the Bull Run Continue?
The Zacks Consensus Estimate for Everest Group’s 2023 earnings is pegged at $46.79 per share, indicating a 72.8% increase from the year-ago reported figure on 18% higher revenues of $14.8 billion. The consensus estimate for 2024 earnings is pegged at $58.08 per share, indicating a 24% increase from the year-ago reported figure on 13.38% higher revenues of $16.7 billion. The expected long-term earnings growth rate is 30.5%, better than the industry average of 12.1%. It has a Growth Score of B.
Everest Group focuses on having a mix of product lines with better rate adequacy and higher long-term margins. Its diversified income streams ensure profitability. This fourth-largest global property and casualty reinsurer remains focused on lowering its volatility and is well poised to capitalize on market opportunities. To that end, the insurer increased its local primary insurance presence in Asia, Latin America and Europe. The insurer estimates gross written premium to witness a three-year CAGR of 10-15%.
New business growth, strong renewal retention and continued favorable rate increases should benefit the Insurance segment. EG estimates gross written premium at this segment to record a three-year CAGR of 18-22%.
Strategic partnerships with core clients and its position as a preferred reinsurance partner poise the Reinsurance segment well for growth. EG estimates gross written premium at this segment to witness a three-year CAGR of 8-12%.
Given prudent underwriting, EG aims for a low-90s combined ratio in 2023.
Everest Group has a strong capital position with sufficient cash generation capabilities. The company continues to benefit from capital adequacy, financial flexibility, long-term operating performance and traditional risk management capabilities.
These, in turn, help in deploying capital for organic growth as well as pursuing strategic acquisitions apart from buying back shares and paying out dividends.
EG targets return on invested assets between 2.75% and 3.25%, while the long-term debt leverage ratio is projected between 15% and 20%.
Everest Group has a VGM Score of B. This helps to identify stocks with the most attractive value, growth and momentum.
Stocks to Consider
Some better-ranked stocks from the same space are Old Republic International ORI, Radian Group RDN and Corebridge Financial, Inc. CRBG.
Old Republic’s earnings surpassed estimates in all the last four quarters, the average beat being 29.85%. The stock has gained 13.6% YTD. It sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for ORI’s 2024 earnings indicates a 1% year-over-year increase. The company has a Value Score of A.
Radian delivered a trailing four-quarter average earnings surprise of 30.88%. YTD, the stock has gained 42.8%. It carries a Zacks Rank #2 (Buy).
The Zacks Consensus Estimate for RDN’s 2023 and 2024 earnings has moved up 5.8% and 4%, respectively, in the past 30 days.
Corebridge Financial’s earnings surpassed estimates in all the last four quarters, the average being 14.34%. YTD, the stock has lost 10%.
The Zacks Consensus Estimate for CRBG’s 2023 and 2024 earnings implies a respective year-over-year rise of 45.6% and 21.2%.
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
Radian Group Inc. (RDN) : Free Stock Analysis Report
Old Republic International Corporation (ORI) : Free Stock Analysis Report
Corebridge Financial, Inc. (CRBG) : Free Stock Analysis Report
Everest Group, Ltd. (EG) : Free Stock Analysis Report
