RenaissanceRe Up More Than 40% YTD: Room for Growth Left?
RenaissanceRe Holdings Ltd. RNR has been in investors’ good books on the back of rising premiums and inorganic growth initiatives.
Shares of this Zacks Rank #2 (Buy) company have surged 41.9% year to date, outperforming the industry’s growth of 4.9% and the Zacks S&P 500 composite’s rise of 18%.
Its return on equity — a profitability measure — came in at 8.9%, higher than the industry's average of 6.8%.
Is the Bull Run Likely to Continue?
The company has a decent record of delivering a positive earnings surprise in all the last four quarters, the average being 141.8%.
It is poised to grow its earnings on the back of a solid inorganic growth profile. It has been undertaking measures to streamline its operations.
Moreover, the company is acquiring and expanding businesses, providing scope for growth. In fact, its buyout of Tokio Millennium Re for $1.5 billion in March 2019 is noteworthy. The transaction is expected to boost the company’s business scale and portfolio.
Further, it has been witnessing a positive trend in gross premiums written, which doubled over five years (seeing a CAGR of 20.9% from 2014 to 2018). Its Casualty and Specialty plus Property segments drove its revenues. We expect the company’s revenue base to continue to grow driven by its inorganic initiatives as well as segmental contributions.
RenaissanceRe also deploys capital to add shareholder value on the back of its solid balance sheet position. Thus it has been hiking its dividend over the past many years. This, in turn, should instill investor confidence in the stock.
The company has been generating significant free cash flow over the past few years (CAGR of 42% from 2015 to 2018). We believe, the company’s impressive financial strength will continue to buoy investor optimism.
The Zacks Consensus Estimate for the company’s 2019 and 2020 earnings indicates an improvement of 59.1% and 1%, respectively, from the year-ago reported figures.
Other Stocks to Consider
Investors interested in the same space may also look into some other top-ranked stocks like First American Financial Corporation FAF, Arch Capital Group Ltd. ACGL and Hallmark Financial Services, Inc. HALL. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
First American Financial Corporation provides financial services and it sports a Zacks Rank #1. The company came up with average four-quarter positive surprise of 9.12%.
Arch Capital Group provides property, casualty and mortgage insurance and reinsurance products. It is Zacks #2 Ranked and pulled off average trailing four-quarter positive surprise of 14.36%.
Hallmark Financial underwrites, markets, distributes and services property/casualty insurance products in the United States. The company has a Zacks Rank of 1 and average four-quarter beat of 97.5%.
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Arch Capital Group Ltd. (ACGL) : Free Stock Analysis Report
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RenaissanceRe Holdings Ltd. (RNR) : Free Stock Analysis Report
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