W.R. Berkley WRB is well-poised for growth, given its strong insurance business, growth in international business and prudent capital deployment.
The insurance business of the company has witnessed premium growth over the past years. In the first nine months of 2019, the insurance business earned 88.4% of net premium written, supported by several new start-up units in varied business lines. Better pricing also added to the top line of the company.
The emerging international business across United Kingdom, Continental Europe, South America, Canada, Scandinavia, Asia and Australia has been boosting premium growth over the years.
Banking on solid capital position, W.R. Berkley hikes dividend each year apart from paying out special dividend and buying back shares. In June 2019, the company approved a special dividend of 50 cents (the 10th straight special dividend) and 10% hike in regular dividend (the 14th consecutive dividend hike). Its dividend yield of 0.7% compares favorably with the industry average of 0.4%, making it an attractive pick for yield-seeking investors.
Estimates for W.R. Berkley have been revised upward over the past seven days, reflecting analysts’ confidence in the stock. The Zacks Consensus Estimate for 2020 earnings per share has moved 0.3% north in the said time frame.
The company has a decent earnings surprise history. It beat estimates in each of the trailing four quarters, with the average being 32.31%.
Shares of W.R. Berkley have rallied 39% in a year’s time, outperforming the industry’s increase of 15.6%.
This Zacks Rank #1 (Strong Buy) property and casualty insurer’s return on equity was 10.6% in the trailing 12-month period, higher than the industry average of 6.9%. Return on equity is a profitability measure that identifies the company’s efficiency in utilizing its shareholders’ funds.
The Zacks Consensus Estimate for 2019 earnings per share is pegged at $3.05, indicating increase of nearly 14.2% from the year-ago reported figure. The expected long-term earnings growth rate is 9%.
It has a favorable Growth Score of B. This style score identifies growth prospects of a company. Back-tested results show that stocks with Growth Score of A or B combined with Zacks Rank #1 or 2 (Buy) offer best growth opportunity.
Other Stocks to Consider
Some other top-ranked stocks from the space include Markel Corporation MKL, Fidelity National Financial, Incorporation FNF and Alleghany Corporation Y. While Markel and Fidelity National Financial sport a Zacks Rank #1, Alleghany carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Markel is a diverse financial holding company. It markets and underwrites specialty insurance products in the United States, the United Kingdom, Canada, and internationally. The company beat earnings estimates in two of the last four reported quarters, the positive surprise being 17.05% on average.
Fidelity National Financial offers various insurance products in the United States. It offers title insurance, escrow, other title related services and home warranty insurance. The company beat earnings estimates in three of the last four reported quarters, the average being 8.67%.
Alleghany Corporation provides property and casualty reinsurance and insurance products in the United States and internationally. The company came up with average four-quarter positive surprise of 25.37%.
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