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Here's Why You Should Hold Everest Re (RE) in Your Portfolio

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Zacks Equity Research
·4 min read
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Everest Re Group, Ltd. RE is well-poised for growth, driven by higher premiums across its segments, solid capital position, and prudent capital deployment

The company has a favorable VGM Score of B. VGM Score helps to identify stocks with the most attractive value, best growth and the most promising momentum.

The stock has seen its estimates for 2021 move up nearly 3.3% in the past 30 days, reflecting investor optimism.

The company delivered an earnings surprise in each of the last four reported quarters with the average beat being 28.95%. In the last reported quarter, the company reported earnings of $2.07 per share, which beat the Zacks Consensus Estimate by 10.1% on the back of higher premiums across its reinsurance and insurance segments.

The Zacks Consensus Estimate for 2021 earnings per share is pegged at $25, indicating an improvement of 100.3%, from the year-ago reported figure. The expected long-term earnings growth rate is 10.4%, which betters the industry average of 8.8%.

Driving Factors

This property and casualty insurer continues to benefit from higher revenues driven by solid performance at its Insurance and Reinsurance segments. Gross premium written witnessed four-year CAGR (2015-2019) of 16% at its Insurance segment and 9.9% at its Reinsurance segments.

This consistent increase in premiums is likely to drive the company’s top line further, which displayed a two-year CAGR (2017-2019) of 60.8%. The Zacks Consensus Estimate for the company’s 2020 and 2021 revenues is pegged at $8.95 billion and $9.93 billion, respectively, indicating an increase of 11.2% and 11% from the year-ago reported figures.

Everest Re remains focused on dynamically allocating capital to businesses presenting the best economic opportunities and investing in premier talent, while developing innovative risk solutions, and maintaining their expense discipline to deliver sustainable and long-term growth in book value per share.

The combination of sustainable growth in earnings along with efficient capital management, diversified business mix, strong balance sheet, low leverage and robust financial strength is expected to place the company in a better position in the future.

Additionally, Everest Re boasts a strong balance sheet with strong operating cash flow. Robust cash flows enable Everest Re to undertake shareholder-friendly moves. Its dividend payments have witnessed a six-year CAGR of 12.9% and currently yield 2.9%, which is better than the industry average of 0.4%.

Shares of this Zacks Rank #3 (Hold) property and casualty insurer have lost 9.4% in a year’s time, against the industry’s increase of 0.4%. We expect the company’s policy to ramp up its growth profile and capital position to help the shares bounce back.

Stocks to Consider

Investors interested in property and casualty industry may look at Donegal Group Incorporation DGICA, Fidelity National Financial Inc., FNF and The Allstate Corporation ALL, each carrying a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Donegal provides personal and commercial lines of property and casualty insurance to businesses and individuals. The company beat estimates in each of the last four quarters, with the average surprise being 86.44%.

Fidelity National provides various insurance products in the United States and offers title insurance, escrow, other title related services and home warranty insurance. It surpassed estimates in each of the last four quarters, with the average surprise being 32.13%.

Allstate provides property and casualty, and other insurance products in the United States and Canada. It surpassed estimates in each of the last four quarters, with the average surprise being 25.24%.

These Stocks Are Poised to Soar Past the Pandemic

The COVID-19 outbreak has shifted consumer behavior dramatically, and a handful of high-tech companies have stepped up to keep America running. Right now, investors in these companies have a shot at serious profits. For example, Zoom jumped 108.5% in less than 4 months while most other stocks were sinking.

Our research shows that 5 cutting-edge stocks could skyrocket from the exponential increase in demand for “stay at home” technologies. This could be one of the biggest buying opportunities of this decade, especially for those who get in early.

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The Allstate Corporation (ALL) : Free Stock Analysis Report
 
Everest Re Group, Ltd. (RE) : Free Stock Analysis Report
 
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Donegal Group, Inc. (DGICA) : Free Stock Analysis Report
 
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