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W.R. Berkley (WRB) Rallies 20% YTD: Will the Rally Last?

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Zacks Equity Research
·3 min read
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W.R. Berkley Corporation WRB shares have gained 19.8% year to date, outperforming its industry's increase of 12.1%, the Finance sector’s increase of 12.8% as well as the Zacks S&P 500 composite’s rise of 10.6% in the said time frame. With market capitalization of $14.1 billion, average volume of shares traded in the last three months was 0.8 million.



Solid insurance business, strong international business and sturdy financial position continue to drive W.R. Berkley. The company has a decent surprise history of beating earnings estimates in two of the last four reported quarters and missing in the other two.

Return on equity for the trailing 12 months is 6.9%, comparing favorably with the industry’s 5.6%, reflecting the company’s efficiency in utilizing shareholders’ fund. The company targets 15% ROE over the long term.

Will the Bull Run Continue?

The Zacks Consensus Estimate for 2021 and 2022 earnings indicates year-over-year increase of nearly 66% and 12%, respectively. The expected long-term earnings growth is pegged at 9%. It has a favorable Growth Score of B.

Rate increase, benefits derived from market dislocations, and high retention should drive the Insurance business.

With primary focus on commercial lines including excess and surplus lines, admitted lines and specialty personal lines, W.R. Berkley’s international business should continue to benefit from operations in the emerging markets of the United Kingdom, Continental Europe, South America, Canada, Scandinavia, Asia and Australia.

W.R. Berkley has been investing in numerous startups since 2006. The company formed Berkley Prime Transportation to focus on providing primary commercial transportation insurance products countrywide for standard and preferred risks.

Sustained solid cash flows enable this Zacks Rank #3 (Hold) insurer to enhance its shareholders value. W.R. Berkley has raised dividends 15 times since 2005 and paid out 11 special dividends since 2012. Its current dividend yield of 0.7% is better than the industry average of 0.4%.

High quality fixed income portfolio should help the company generate above-market risk adjusted investment return over the long term.

The company is well poised for progress, as is evident from its impressive VGM Score of A. Here V stands for Value, G for Growth and M for Momentum, with the score being a weighted combination of all three factors.

Stocks to Consider

Some better-ranked stocks in the same space include Fidelity National Financial FNF, First American Financial FAF and Kinsale Capital Group KNSL, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Fidelity National Financial delivered an earnings surprise of 60.80% in the last reported quarter.

First American Financial delivered an earnings surprise of 29.45% in the last reported quarter.

Kinsale Capital delivered an earnings surprise of 48.05% in the last reported quarter.

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Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.

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W.R. Berkley Corporation (WRB) : Free Stock Analysis Report

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