Here's Why Hold is an Apt Strategy for Markel (MKL) Now
Markel Corporation’s MKL strong policy retention levels, expanded product offerings, lower operating expenses and prudent capital deployment make it worth retaining in one’s portfolio.
The Zacks Consensus Estimate for Markel’s 2023 earnings is pegged at $82.77, indicating a 23.5% increase from the year-ago reported figure on 11.2% higher revenues of $14.76 billion.
The consensus estimate for 2024 earnings is $92.89, indicating a 12.2% increase from the year-ago reported figure on 8.3% higher revenues of $15.99 billion.
Northbound Estimate Revision
The Zacks Consensus Estimate for 2024 earnings has moved 3.2% north in the past 60 days. This should instill investors' confidence in the stock.
Zacks Rank & Price Performance
Markel currently carries a Zacks Rank #3 (Hold). The stock has lost 18.3% compared with the industry’s decrease of 15.2% in the past year.
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Return on Equity (ROE)
Markel’s trailing 12-month return on equity was 7.9%, up 190 basis points year over year and compared favorably with the industry average of 6.6%. ROE reflects its efficiency in using its shareholders’ funds.
Markel has a favorable VGM Score of A. VGM Score helps identify stocks with the most attractive value, best growth and the most promising momentum.
Premiums in the professional liability and general liability product lines are likely to improve in the long run. The improvement should be backed by solid growth in new business, and the ongoing favorable pricing trends across most of the product lines. These are especially the professional liability and general liability product lines in both the Insurance and Reinsurance segments.
Higher new business volume, favorable rates and increased retention of renewals are likely to boost the performance of the Insurance segment. Continued expansion of the classic cars business should boost the personal lines product business.
Markel’s net investment income is likely to be driven by higher interest rates on short-term investments and cash equivalents during the last half of 2022 and higher interest rates within its fixed maturity portfolio through recent purchases at higher yield rates.
The favorable impact of higher earned premiums as well as lower compensation and general expenses across both the Insurance and Reinsurance segments is likely to improve the expense ratio of Markel.
The combined ratio of Markel should continue to benefit from a lower attritional loss ratio, a favorable pricing environment and the impact of underwriting actions taken to enhance profitability.
Markel considers strategic buyouts to be a prudent approach to ramp up its growth profile. Acquisitions have helped the property and casualty insurer enhance its surety capabilities, ramp up Markel Ventures’ revenues and expand its reinsurance product offerings.
Markel seeks to maintain prudent levels of liquidity and financial leverage for the protection of policyholders, creditors and shareholders. Higher net premium volumes across both the underwriting segments should boost operating cash flow.
Riding on a solid capital position, Markel has engaged in share buybacks. At present, $511.7 million remained available for repurchases under the program.
Stocks to Consider
Some better-ranked stocks from the property and casualty insurance industry are Axis Capital Holdings Limited AXS, 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.
Axis Capital beat estimates in three of the last four quarters and missed in one, the average being 5.70%. The Zacks Consensus Estimate for 2023 and 2024 has moved 5% and 0.3%, north, respectively, in the past 60 days.
The Zacks Consensus Estimate for AXS’ 2023 and 2024 earnings per share is pegged at $7.50 and $8.50, indicating a year-over-year increase of 29% and 13.3%, respectively. In the past year, AXS has lost 9.9%.
Everest Re beat estimates in each of the last four quarters, the average being 18.41%.
The Zacks Consensus Estimate for RE’s 2023 and 2024 earnings per share is pegged at $45.63 and $53.02, indicating a year-over-year increase of 68.5% and 16.1%, respectively. In the past year, RE has gained 15.8%.
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 25.2%.
The Zacks Consensus Estimate for KNSL’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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Axis Capital Holdings Limited (AXS) : Free Stock Analysis Report
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