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Reasons Why Investors Should Consider Buying RLI Stock Now

RLI Corp. RLI is well-poised to gain from a compelling product portfolio, rate increases, improved retention, higher premium receipts and sufficient liquidity.

Optimistic Growth Projections

The Zacks Consensus Estimate for 2023 and 2024 earnings per share is pegged at $4.80 and $5.56, indicating an increase of 2.3% and 15.8% from the year-ago reported figure, driven by 16.7% and 13.7% higher revenues of $1.44 billion and $1.63 billion, respectively.

Estimate Revision

The Zacks Consensus Estimate for 2023 and 2024 has moved 12.1% and 0.3% north in the past 30 days. This should instill investors' confidence in the stock.

Earnings Surprise History

RLI has a solid track record of beating earnings estimates in three of the last four quarters while missing in one, the average being 145.76%.

Zacks Rank & Price Performance

The company currently carries a Zacks Rank #2 (Buy). In the past year, the stock has gained 2.8% compared with the industry’s rise of 10.3%.

Zacks Investment Research
Zacks Investment Research


Image Source: Zacks Investment Research

Business Tailwinds

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.

RLI will keep investing in customer relationships, technology and people to grow underwriting profits in the future.

The company has been paying dividends for 187 consecutive quarters and increased regular dividends in each of the last 48 years. Its dividend yield is currently 0.7%, which is higher than the industry’s average of 0.3%. Over the last 10 years, the insurer has returned $1.37 billion to shareholders and the quarterly dividend has grown an average of 5% per year.

Other Stocks to Consider

Some other top-ranked stocks from the property and casualty insurance industry are Mercury General Corporation MCY, Kinsale Capital Group, Inc. KNSL and Cincinnati Financial Corporation CINF. While Mercury General sports a Zacks Rank #1 (Strong Buy), Kinsale Capital and Cincinnati Financial carry a Zacks Rank #2 each at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Mercury General beat estimates in two of the last four quarters and missed in the other two, the average being 2,833.05%. In the past year, the insurer has lost 1.8%.

The Zacks Consensus Estimate for MCY’s 2023 and 2024 earnings per share indicates a year-over-year increase of 65.2% and 343.7%, respectively.

Kinsale Capital has a solid track record of beating earnings estimates in each of the last four quarters, the average being 14.25%.

The Zacks Consensus Estimate for KNSL’s 2023 and 2024 earnings has moved 2.7% and 1.7% north, respectively, in the past 30 days, reflecting analysts’ optimism.

Cincinnati Financial surpassed earnings in three of the last four quarters and missed in one, the average being 38.33%. In the past year, the insurer has lost 1.6%.

The Zacks Consensus Estimate for CINF’s 2023 and 2024 earnings per share indicates a year-over-year increase of 31.8% and 8.1%, 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

Cincinnati Financial Corporation (CINF) : Free Stock Analysis Report

Mercury General Corporation (MCY) : Free Stock Analysis Report

Kinsale Capital Group, Inc. (KNSL) : Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research

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