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Is it Time to Add Argo Group (ARGO) Stock to Your Portfolio?

Argo Group International Holdings’ ARGO highly profitable business, growth efforts, expense initiative program, investment in technology and a solid capital position along with favorable growth make it a stock worth adding to one’s portfolio.

Argo Group’s has a decent earnings surprise history. It surpassed estimates in three of the last four quarters and missed once.

Zacks Rank & Price Performance

Argo Group currently sports a Zacks Rank #1 (Strong Buy). In the past three months, the stock has rallied 27.9%, outperforming the industry’s increase of 12.9%.

Zacks Investment Research
Zacks Investment Research

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Optimistic Growth Projections

The Zacks Consensus Estimate for 2023 earnings is pegged at $3.00, indicating an improvement of 215.8% from the year-ago reported figure.

Growth Drivers

Argo Group remains focused on being a pure-play U.S. specialty insurer and pursues strategic actions to streamline its business model, strengthen its balance sheet and re-underwrite. These strategic initiatives drive efficiencies in its core businesses

Argo Group’s highly profitable businesses are well-poised for growth in attractive markets.

Argo Pro, Casualty, Construction, Environmental, Inland Marine and Surety contribute two-thirds of the U.S. premium base.  ARGO continues to experience better pricing across its portfolio of businesses.

In its continuous efforts to improve underwriting profitability, the insurer exited reinsurance operations and non-core lines of business, lowered property exposure substantially, lowered volatility and increased price. These, in turn, will help ARGO achieve its target.

The insurance industry is undergoing digitalization at an accelerated pace and ARGO is no exception. Argo Group consistently invests in technology to improve operating efficiency and risk selection while reducing overall expenses.

Banking on operational strength, ARGO has a solid balance sheet with modest financial leverage.

Attractive Valuation

Price to book value, the best multiple for valuing insurance stocks, currently stands at 0.75 for ARGO, lower than the industry average of 1.48.

The stock carries an impressive Value Score of A. Value Score helps find stocks that are undervalued. Back-tested results have shown that stocks with a favorable Value Score, when combined with a solid Zacks Rank, are the best investment bets.

Before valuation expands it is worth to add the stocks to portfolio.

Other Stocks to Consider

Some other top-ranked stocks from the property and casualty insurance industry are American Financial Group, Inc. AFG, Root, Inc. ROOT and Kinsale Capital Group, Inc. KNSL, each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

American Financial’s earnings surpassed estimates in all the last four quarters, the average beat being 28.16%. In the past year, American Financial has lost 0.8%.

The Zacks Consensus Estimate for AFG’s 2022 and 2023 earnings indicates a respective year-over-year increase of 0.2% and 2.9%.

Root delivered a trailing four-quarter average earnings surprise of 22.44%. In the past year, ROOT has lost 90.5%.

The Zacks Consensus Estimate for ROOT’s 2022 and 2023 earnings indicates a respective year-over-year increase of 44.8% and 23.8%.

Kinsale Capital’s earnings surpassed estimates in all the last four quarters, the average being 15.16%. In the past year, Kinsale Capital has gained 32.9%.

The Zacks Consensus Estimate for KNSL’s 2022 and 2023 earnings implies a respective year-over-year rise of 27.5% and 21.9%.

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American Financial Group, Inc. (AFG) : Free Stock Analysis Report

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

Argo Group International Holdings, Ltd. (ARGO) : Free Stock Analysis Report

Root, Inc. (ROOT) : Free Stock Analysis Report

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