Kinsale Capital (KNSL) Up 63.4% in a Year: Will the Rally Last?
Shares of Kinsale Capital Group, Inc. KNSL have gained 63.4% in a year, outperforming the industry's growth of 14.9%. The Zacks S&P 500 composite increased 14.8% in the said time frame. With a market capitalization of $8.2 billion, the average volume of shares traded in the last three months was 0.1 million.
Image Source: Zacks Investment Research
The rally was largely driven by favorable estimates, rate increases, lower underwriting expenses and a focus on the Excess and Surplus Lines Insurance market.
This Zacks Rank #1 (Strong Buy) property and casualty insurer has a solid track record of beating earnings estimates in each of the last four quarters, the average being 14.77%.
Kinsale Capital has an impressive Growth Score of B. This style score helps analyze the growth prospects of a company.
Will the Bull Run Continue?
The Zacks Consensus Estimate for Kinsale Capital’s 2023 earnings is pegged at $10.37, indicating a 32.9% increase from the year-ago reported figure on 36.4% higher revenues of $1.12 billion. The consensus estimate for 2024 earnings is pegged at $12.41, indicating a 19.6% increase from the year-ago reported figure on 19.9% higher revenues of $1.34 billion.
KNSL’s premium income is expected to improve in the near term on the back of higher submission activity from brokers and increased rates across most lines of business, resulting from continued favorable conditions in the E&S market.
The combination of highly controlled underwriting combined with advanced technology-driven low costs and a focus on the Excess and Surplus Lines Insurance market is driving the profitability and growth of Kinsale Capital.
The Excess and Surplus Lines Insurance segment continues to witness rapid growth owing to dislocation in the overall property and casualty market.
A combination of premium growth and favorable rate increases from a strong underwriting environment and lower levels of operating expenses relative to premium growth and management's cost control efforts are expected to drive the underwriting income of the insurer.
The expense ratio is expected to gain from lower net commissions incurred and lower other underwriting expenses as a percentage of earned premiums, economies of scale from premium expansion and management's continued focus on controlling costs.
Strong cash flows enable the property and casualty insurer to engage in shareholder-friendly moves like dividend hikes. Banking on solid cash flow, KNSL has increased dividend since 2017 at an eight-year CAGR (2016-2023) of 13.7%.
Kinsale Capital’s annualized operating return on equity (ROE) expanded 700 basis points year over year to 29.1% in the first quarter of 2023. Growth in the business from favorable market conditions, rate increases and a decrease in average stockholders' equity are likely to boost the ROE.
The Zacks Consensus Estimate for 2023 and 2024 has moved 4.5% and 3.9% north, respectively, in the past 60 days, reflecting analysts’ optimism.
Other Stocks to Consider
Some other top-ranked stocks from the property and casualty insurance industry are RLI Corp. RLI, Axis Capital Holdings Limited AXS and Root, Inc. ROOT. While RLI Corp. sports a Zacks Rank #1, Axis Capital and Root carry a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Axis Capital beat estimates in three of the last four quarters and missed in one, the average being 6.50%. In the past year, AXS has lost 1.5%.
The Zacks Consensus Estimate for AXS’ 2023 and 2024 earnings per share is pegged at $7.74 and $8.60, indicating a year-over-year increase of 33.2% and 11.1%, respectively.
RLI Corp. beat estimates in each of the last four quarters, the average being 43.50%. In the past year, RLI has gained 16.8%.
The Zacks Consensus Estimate for RLI’s 2023 and 2024 earnings has moved 10.1% and 3.7% north, respectively, in the past 30 days.
Root beat estimates in each of the last four quarters, the average being 18.24%. In the past year, the insurer has lost 73%.
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.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
RLI Corp. (RLI) : Free Stock Analysis Report
Axis Capital Holdings Limited (AXS) : Free Stock Analysis Report
Kinsale Capital Group, Inc. (KNSL) : Free Stock Analysis Report
Root, Inc. (ROOT) : Free Stock Analysis Report
