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Here's Why You Should Add Alleghany (Y) Stock to Portfolio

Zacks Equity Research
·3 mins read

Alleghany Corporation Y is well-poised for growth, riding on solid underwriting and a sturdy financial position.

The Zacks Consensus Estimate for 2020 and 2021 earnings has moved up 31.9% and 15.6%, respectively in the past 30 days, reflecting analysts’ optimism.

Alleghany has been delivering increasing net premiums earned since 2016 banking on solid operations at Insurance and Reinsurance. Continued strong underwriting performances by TransRe and RSUI, CapSpecialty and PacificComp should continue to drive results.

The company noted significant opportunity in excess & supply market and RSUI is well positioned to capitalize on the same. With the Reinsurance market firming up, the company identified opportunity in casualty lines with rate increases above claim trends. With a decent capitalized base, Alleghany is well-positioned to support its subsidiaries in taking advantage of growth opportunities.

This Zacks Rank #2 (Buy) insurer’s investment portfolio is prudently positioned with lower-than-average allocation to risk assets.

Alleghany boasts a solid balance sheet with high liquidity and improving leverage. Its debt to capital of 19.3% betters the industry average of 21.3%. The company exited the second quarter with $1.7 billion in cash balance.

Shares of Alleghany have lost 29.8% year to date compared with the industry's decline of 6.6%.



The stock is currently undervalued. Price to book of 0.95X is lower than the industry average of 1.32X. Also the stock carries an impressive Value Score of B. Value Score helps find stocks that are undervalued. 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 are the best investment bets.

Other Stocks to Consider

Some other top-ranked companies in the insurance industry are Donegal Group DGICA, The Allstate Corporation ALL and Fidelity National Financial FNF, each carrying a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Donegal Group delivered an earnings surprise of 134.62% in the last-reported quarter.

Allstate came up with an earnings surprise of 74.47% in the last-reported quarter.

Fidelity National delivered an earnings surprise of 53.52% in the last-reported quarter.

5 Stocks Set to Double

Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.

Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.

Today, See These 5 Potential Home Runs >>
 


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
 
The Allstate Corporation (ALL) : Free Stock Analysis Report
 
Fidelity National Financial, Inc. (FNF) : Free Stock Analysis Report
 
Alleghany Corporation (Y) : Free Stock Analysis Report
 
Donegal Group, Inc. (DGICA) : Free Stock Analysis Report
 
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Zacks Investment Research