Here's Why Hold Strategy is Apt for Markel Group (MKL) Now
Markel Group Inc. MKL has been in investors’ good books on the back of new business volume, strong retention levels, an improving rate environment, higher interest income on cash equivalents, strategic buyouts and prudent capital deployment.
Growth Projections
The Zacks Consensus Estimate for MKL’s 2025 earnings is pegged at $99.55 per share, indicating a 20% increase from the year-ago reported figure on 5.5% higher revenues of $15.97 billion.
Zacks Rank & Price Performance
Markel Group currently carries a Zacks Rank #3 (Hold). The stock has risen 12% compared with the industry’s growth of 6.9% in the past year.
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Business Tailwinds
MKL has been generating improved premiums. An improvement in new business volume, strong retention levels, continued increases in rates and expanded product offerings should help the insurer retain the momentum.
Net investment income witnessed a CAGR of 10.7% in the last five years (2019-2023). Investment income should continue to benefit from an improving rate environment, higher interest income on cash equivalents, fixed maturity securities and short-term investments due to higher yields.
Markel Group considers strategic buyouts a prudent approach to ramp up its growth profile. Acquisitions have helped the company enhance its surety capabilities, ramp up Markel Ventures’ revenues and expand its reinsurance product offerings. The insurer has been pursuing acquisitions to achieve profitable growth in insurance operations and create additional value on a diversified basis in Markel Ventures operations.
Operating revenues witnessed a seven-year (2017-2023) CAGR of 20.7%. Higher revenues at construction services and transportation-related businesses due to a combination of increased demand, higher prices and growth, as well as increased production at one of the equipment manufacturing businesses are expected to boost operating revenues. The increase also reflected a full-year contribution from Metromont.
Banking on a strong capital position, the insurer has engaged in share buybacks. The company has a share repurchase program authorized by the board that provides for the repurchase of up to $750 million of shares. As of Dec 31, 2023, $713 million remained available for repurchases under the program. In 2023, the company repurchased shares for $445 million.
Stocks to Consider
Some better-ranked stocks from the Diversified Operations industry are Carlisle Companies Incorporated CSL, Griffon Corporation GFF and Vector Group Ltd. VGR, each sporting a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Carlisle beat on earnings in three of the last four quarters and missed in one, the average being 7.55%. In the past year, CSL has gained 35.6%.
The Zacks Consensus Estimate for CSL’s 2024 and 2025 earnings per share is pegged at $18.44 and $20.31, respectively, indicating a year-over-year increase of 18.8% and 10.1%.
Griffon delivered a four-quarter average earnings surprise of 42.03%. In the past year, GFF's shares have surged 93.3%.
The Zacks Consensus Estimate for GFF’s 2024 and 2025 earnings per share is pegged at $4.80 and $5.97, respectively, indicating a year-over-year increase of 5.7% and 24.2%.
Vector beat on earnings in two of the last four quarters and missed in the other two, delivering an average surprise of 10.22%. In the past year, VGR's shares have lost 15.9%.
The Zacks Consensus Estimate for VGR’s 2024 and 2025 earnings per share is pegged at $1.24 and $1.33, respectively, indicating a year-over-year improvement of 0.8% and 7.2%.
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Carlisle Companies Incorporated (CSL) : Free Stock Analysis Report
Markel Group Inc. (MKL) : Free Stock Analysis Report
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