It has been about a month since the last earnings report for Markel (MKL). Shares have lost about 1.8% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Markel due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Markel Q3 Earnings Down Y/Y, Revenues Beat Estimates
Markel Corporation reported third-quarter 2019 earnings of $13.95 per share that declined 51% year over year.
The company witnessed top-line growth as well as excellent results from Markel Ventures.
Total operating revenues of $2 billion beat the Zacks Consensus Estimate by 0.3%. The top line rose 11.1% year over year on higher premiums, investment income, product and services plus other revenues.
Total operating expenses of Markel increased 5.4% year over year to $1.8 billion.
Markel’s combined ratio improved 500 basis points (bps) year over year to 94% in the reported quarter.
Insurance: Net written premiums were up 15.7% year over year to $1.2 billion in the quarter under review.
Underwriting profit came in at $81.3 million, surging 91.5% from the year-ago quarter.
Combined ratio improved 400 bps year over year to 92% in the quarter under discussion.
Reinsurance: Net written premiums increased 4.2% year over year to $187.2 million.
Underwriting loss was $6.5 million, narrower than $33.7 million incurred in the year-ago quarter.
Combined ratio improved 1200 bps year over year to 103% in the third quarter.
Markel Ventures: Profit of $35.5 million increased 50% year over year.
Markel exited the third quarter with cash and cash equivalents of $2.7 billion, up 34.8% from the level at year-end 2018.
Debt balance increased 29.5% to $3.9 billion as of Mar 31, 2019 from 2018 end.
Book value per share increased 17.6% from year-end 2018 to $768.98 as of Jun 30, 2019.
Net cash from operating activities was $711.9 million in the first nine months of 2019, down 6.7% year over year.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision flatlined during the past month.
At this time, Markel has a subpar Growth Score of D, however its Momentum Score is doing a bit better with a C. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Markel has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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