Here's Why Investors Should Retain Everest Group (EG) Stock
Everest Group, Ltd. EG is well-poised to gain on the back of product diversification, higher income from the fixed income portfolio, favorable estimates, strong renewal retention, prudent capital deployment and a solid capital position.
Growth Projections
The Zacks Consensus Estimate for Everest Group’s 2025 earnings per share is pegged at $68.07, indicating a year-over-year increase of 9.7%. The consensus estimate for revenues is $19.26 billion, implying an increase of 9.4%.
The expected long-term earnings growth rate is 40.4%, which is better than the industry average of 9.1%.
Northbound Estimate Revision
The Zacks Consensus Estimate for EG’s 2023 and 2024 earnings has moved 0.5% and 2.2% north, respectively, in the past 30 days. This should instill investors' confidence in the stock.
Earnings Surprise History
EG surpassed earnings estimates in three of the last four quarters and missed in one, the average being 34.67%.
Zacks Rank & Price Performance
Everest Group currently carries a Zacks Rank #3 (Hold). Year to date, the stock has gained 4% compared with the industry’s growth of 5.9%.
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Return on Equity
Everest Group’s annualized operating income return on equity was 20.9% in 2023, which expanded 1,490 basis points (bps) year over year. Its return on equity for the trailing 12 months is 25.1%, which expanded 1,270 bps year over year and compared favorably with the industry average of 13.3%. This reflects its efficiency in utilizing its shareholders’ funds.
Style Score
The insurer has a VGM Score of A. VGM Score helps identify stocks with the most attractive value, best growth and the most promising momentum.
Business Tailwinds
Global presence, product diversification, rate increase and high retention rate continue to drive EG’s overall growth. The Insurance segment is poised to benefit from an increase in property and short tail business and a rise in specialty casualty business. On the other hand, leveraging opportunities stemming from the continued disruption and evolution of the reinsurance market should poise the Reinsurance segment for growth.
Net investment income stands to benefit from higher income from the fixed income portfolio, increase in limited partnership income, rise in dividend income from equity portfolio and higher income from other invested assets. An improved interest rate environment adds to the upside.
Everest Group has a strong capital position, banking on sufficient cash generation capabilities and benefits from capital adequacy, financial flexibility, long-term operating performance and traditional risk management capabilities.
Everest Group boasts a consistent increase in dividends, with the metric witnessing an eight-year (2016-2023) CAGR of 34.9%. The insurer targets a total shareholder return on equity of more than 17% from 2024 to 2026, reflecting robust and well-diversified earnings power. EG boasts consistent and industry-leading shareholder returns.
Optimistic Guidance
Given prudent underwriting, EG aims 90-92% combined ratio for the Insurance segment between 2024 and 2026. EG expects to achieve 89-91% combined ratio for the total group in the same time frame.
Stocks to Consider
Some better-ranked stocks from the multi-line insurance industry are Enact Holdings ACT, CNO Financial Group CNO and MGIC Investment Corporation MTG. While Enact Holdings and CNO Financial sport a Zacks Rank #1 (Strong Buy) each, MGIC Investment carries a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Enact Holdings delivered a four-quarter average earnings surprise of 24.59%. Year to date, ACT’s shares have lost 0.9%.
The Zacks Consensus Estimate for ACT’s 2024 and 2025 earnings has moved up 0.7% and 1.5%, respectively, in the past seven days.
The Zacks Consensus Estimate for CNO Financial’s 2024 and 2025 earnings implies a 2.5% and 7.1% increase from the year-ago estimated figure, respectively. Year to date, CNO’s shares have lost 4.3%.
CNO’s earnings surpassed estimates in two of the last four quarters and missed in the other two, the average surprise being 3.62%.
MGIC Investment delivered a four-quarter average earnings surprise of 14.84%. Year to date, the insurer has gained 2.4%.
The Zacks Consensus Estimate for MTG’s 2024 and 2025 earnings has moved up nearly 0.4% and 0.3%, respectively, in the past 30 days.
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MGIC Investment Corporation (MTG) : Free Stock Analysis Report
CNO Financial Group, Inc. (CNO) : Free Stock Analysis Report
Enact Holdings, Inc. (ACT) : Free Stock Analysis Report
Everest Group, Ltd. (EG) : Free Stock Analysis Report
