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RenaissanceRe (RNR) Hits 52-Week High, Can the Run Continue?

Zacks Equity Research
Here at Zacks, our focus is on the proven Zacks Rank system, which emphasizes earnings estimates and estimate revisions to find great stocks. Nevertheless, we are always paying attention to the latest value, growth, and momentum trends to underscore strong picks.

Have you been paying attention to shares of RenaissanceRe Holdings (RNR)? Shares have been on the move with the stock up 5.8% over the past month. The stock hit a new 52-week high of $180.57 in the previous session. RenaissanceRe Holdings has gained 34.6% since the start of the year compared to the 11.1% move for the Zacks Finance sector and the 5.1% return for the Zacks Insurance - Property and Casualty industry.

What's Driving the Outperformance?

The stock has a great record of positive earnings surprises, as it hasn't missed our earnings consensus estimate in any of the last four quarters. In its last earnings report on May 7, 2019, RenaissanceRe reported EPS of $3.6 versus consensus estimate of $3.2 while it beat the consensus revenue estimate by 9.07%.

For the current fiscal year, RenaissanceRe is expected to post earnings of $12.6 per share on $2.65 billion in revenues. This represents a 37.51% change in EPS on a 22.58% change in revenues. For the next fiscal year, the company is expected to earn $13.52 per share on $2.91 billion in revenues. This represents a year-over-year change of 7.26% and 9.64%, respectively.

Valuation Metrics

RenaissanceRe may be at a 52-week high right now, but what might the future hold for the stock? A key aspect of this question is taking a look at valuation metrics in order to determine if the company has run ahead of itself.

On this front, we can look at the Zacks Style Scores, as these give investors a variety of ways to comb through stocks (beyond looking at the Zacks Rank of a security). These styles are represented by grades running from A to F in the categories of Value, Growth, and Momentum, while there is a combined VGM Score as well. The idea behind the style scores is to help investors pick the most appropriate Zacks Rank stocks based on their individual investment style.

RenaissanceRe has a Value Score of D. The stock's Growth and Momentum Scores are B and A, respectively, giving the company a VGM Score of B.

In terms of its value breakdown, the stock currently trades at 14.3X current fiscal year EPS estimates. On a trailing cash flow basis, the stock currently trades at 19.8X versus its peer group's average of 14.1X. Additionally, the stock has a PEG ratio of 1.5. This isn't enough to put the company in the top echelon of all stocks we cover from a value perspective.

Zacks Rank

We also need to look at the Zacks Rank for the stock, as this supersedes any trend on the style score front. Fortunately, RenaissanceRe currently has a Zacks Rank of #2 (Buy) thanks to rising earnings estimates.

Since we recommend that investors select stocks carrying Zacks Rank of 1 (Strong Buy) or 2 (Buy) and Style Scores of A or B, it looks as if RenaissanceRe passes the test. Thus, it seems as though RenaissanceRe shares could still be poised for more gains ahead.

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