Here's Why You Should Add AXIS Capital (AXS) to Portfolio Now?
AXIS Capital Holdings Limited‘s AXS focus on expansion into new verticals, the increasing popularity of index products in the market, solid balance sheet and effective capital deployment make it worth adding to one’s portfolio.
AXS has a decent history of delivering positive surprises in three of the last four reported quarters. The Zacks Consensus estimate for 2024 moved about 1% up in the last 30 days, reflecting analysts’ optimism.
Zacks Rank & Price Performance
AXS currently sports a Zacks Rank #1 (Strong Buy). Year to date, the stock has lost 4.6% compared with the industry’s decline of 6.3%.
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Return on Equity
Return on equity was 12.7% in the trailing 12 months, better than the industry average of 6.7%. AXIS Capital eyes a low-90s combined ratio to fuel attractive ROE.
Optimistic Growth Projections
The Zacks Consensus Estimate for AXIS Capital’s 2023 earnings is pegged at $7.50 per share, indicating a 29.1% increase from the year-ago reported figure of 11% higher revenues of $5.9 billion. The consensus estimate for 2024 earnings is pegged at $8.50 per share, indicating a 13.4% increase from the year-ago reported figure on 5.1% higher revenues of $6.2 billion.
The expected long-term earnings growth rate is 5%.
Growth Drivers
AXS remains focused on improving risk-adjusted return banking on the rate increase, prudent underwriting and PML reductions supported by third-party capital. AXIS Capital expects disciplined pricing to persist in insurance and reinsurance through 2023.
In tandem with the industry’s trend of accelerated digitalization, AXS has been investing in technology, which will help it effectively use data, ensure higher-value processes and activities, support new lines of business and enable efficient operations.
AXIS Capital has been growing its business lines, which are likely to provide a solid double-digit return on equity opportunities. This specialty insurer remains focused on delivering sustained profitable growth and increased shareholder value.
Effective Capital Deployment
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 an eight-year CAGR (2015 – 2022) of 5.3%, driven by solid earnings. Its dividend yield is currently 3.4%, way above the industry average of 0.4%.
The insurer also has a $100 million share buyback program through 2023 under its authorization.
Attractive Valuation
AXS’ shares are trading at a price to book value multiple of 1.07, lower than the industry average of 1.37. It has a favorable VGM Score of B. Back-tested results have shown that stocks with a Value Score of A or B, combined with a Zacks Rank #1 or #2 (Buy), are best investment opportunities.
Other Stocks to Consider
Some other top-ranked stocks from the property and casualty insurance industry are RenaissanceRe RNR, Everest Re Group, Ltd. RE and Kinsale Capital Group, Inc. KNSL, each sporting a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
RenaissanceRe beat estimates in two of the last four quarters and missed in the other two. The Zacks Consensus Estimate for 2023 has moved 0.6% north in the past seven days.
The Zacks Consensus Estimate for RNR 2023 and 2024 earnings per share is pegged at $23.52 and $26.72, indicating year-over-year increases of 222.2% and 13.6%, respectively. In the past year, RNR has gained 26.6%.
The Zacks Consensus Estimate for Everest Re’s 2023 and 2024 earnings per share is pegged at $46.03 and $53.25, indicating a year-over-year increase of 69.9% and 15.7%, respectively. In the past year, RE has gained 26.6%.
RE beat estimates in each of the last four quarters, the average being 18.41%.
Kinsale Capital has a solid track record of beating earnings estimates in each of the last four quarters, the average being 13.83%. In the past year, KNSL has gained 35.9%.
The Zacks Consensus Estimate for Kinsale Capital’s 2023 and 2024 earnings per share is pegged at $9.86 and $11.85, indicating a year-over-year increase of 26.4% and 20.2%, respectively.
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RenaissanceRe Holdings Ltd. (RNR) : Free Stock Analysis Report
Axis Capital Holdings Limited (AXS) : Free Stock Analysis Report
Everest Re Group, Ltd. (RE) : Free Stock Analysis Report
Kinsale Capital Group, Inc. (KNSL) : Free Stock Analysis Report
