Here's Why Investors Should Consider Betting on RLI Stock Now
RLI Corp. RLI has been gaining momentum on the back of product diversification, wider distribution base in personal umbrella, rate increases and effective capital deployment.
Growth Projections
The Zacks Consensus Estimate for RLI’s 2023 earnings is pegged at $5.06 per share, indicating a 7.8% increase from the year-ago reported figure on 16.9% higher revenues of $1.44 billion. The consensus estimate for 2024 earnings is pegged at $5.25 per share, indicating a 3.8% increase from the year-ago reported figure on 9.4% higher revenues of $1.57 billion.
Estimate Revision
The Zacks Consensus Estimate for 2023 and 2024 has moved 3.6% and 10.9% north, respectively, in the past 30 days. This should instill investors' confidence in the stock.
Earnings Surprise History
RLI has a decent earnings surprise history. It beat estimates in each of the last four quarters, the average being 43.50%.
Zacks Rank & Price Performance
The company currently sports a Zacks Rank #1 (Strong Buy). In the past year, the stock has gained 17.1% compared with the industry’s rise of 18.2%.
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Return on Equity (ROE)
RLI has been effectively improving its return on equity over the years. ROE in the trailing 12 months of 19.2% expanded 250 basis points year over year and was better than the industry average of 6.8%. This reflects the insurer’s efficiency in utilizing shareholders’ fund.
Business Tailwinds
Premium, the main source of RLI’s revenues, is expected to gain from solid performance in Property and Surety segments.
Product diversification across the Casualty, Property and Surety segments of the company has fueled the insurer’s growth and financial success. The Casualty segment continues to gain from an expanded distribution base in personal umbrella and rate increases.
The commercial property business has been gaining from higher wind and earthquake exposure rates. Rate increases, improved retention and new opportunities in the inland marine space should benefit marine products.
The Surety segment continues to benefit from its compelling product portfolio, growth within existing accounts and writing of bonds with new customers.
Building materials inflation and new accounts will aid commercial and contract surety businesses in the future. RLI boasts solid operating results and its financial position remained strong. Operating cash flows should gain from higher premium receipts.
A high-interest rate environment should continue benefiting the company’s net investment income metric in the future. It rose 51% year over year in the first quarter.
RLI will keep investing in customer relationships, technology and people to grow underwriting profits in the future.
The company has been paying dividends for 186 consecutive quarters and has a dividend yield of 0.7%, better than the industry’s average of 0.3%, making the stock an attractive pick for yield-seeking investors. RLI has $87.5 million of remaining capacity from the repurchase program.
Other Stocks to Consider
Some other top-ranked stocks from the property and casualty insurance industry are NMI Holdings Inc NMIH, Kinsale Capital Group, Inc. KNSL and Root, Inc. ROOT, each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
NMI Holdings beat estimates in each of the last four quarters, the average being 5.95%. In the past year, NMIH has gained 55.7%.
The Zacks Consensus Estimate for NMI Holdings’ 2023 and 2024 earnings per share is pegged at $3.58 and $3.93, indicating a year-over-year increase of 5.6% and 9.5%, respectively.
Kinsale Capital has a solid track record of beating earnings estimates in each of the last trailing four quarters, the average being 14.77%. In the past year, KNSL has rallied 51.9%.
The Zacks Consensus Estimate for KNSL’s 2023 and 2024 earnings per share is pegged at $10.62 and $12.89, indicating a year-over-year increase of 36.1% and 21.3%, respectively.
Root beat estimates in each of the last four quarters, the average being 18.24%. In the past year, the insurer has lost 53.7%.
The Zacks Consensus Estimate for ROOT’s 2023 and 2024 earnings per share indicates a year-over-year increase of 43.8% and 42.5%, respectively.
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RLI Corp. (RLI) : Free Stock Analysis Report
NMI Holdings Inc (NMIH) : Free Stock Analysis Report
Kinsale Capital Group, Inc. (KNSL) : Free Stock Analysis Report
Root, Inc. (ROOT) : Free Stock Analysis Report
