RenaissanceRe Holdings Ltd. RNR is well poised for growth on the back of an improving top line and strategic initiatives.
Estimates for the company have been revised upward over the past seven days, reflecting brokers’ confidence in the stock. The stock has seen the Zacks Consensus Estimate for 2019 and 2020 move 5.6% and 3.4% north, respectively.
The company also retained investors' bullish sentiments surrounding the stock by maintaining its positive surprise trend in the last four quarters, the average being 151.82%. This reflects the company’s operational excellence.
Shares of this Zacks Rank #1 (Strong Buy) company have rallied 29% in the past year, outperforming its ’s growth of 2.3%.
Its return on equity — a profitability measure — stands at 9.25%, higher than the industry’s average of 7.1%.
Now let’s quickly glance through the factors that make RenaissanceRe stock an investor favorite.
The company recently reported first-quarter 2019 operating earnings per share of $3.60, which beat the Zacks Consensus Estimate by 12.5% and also improved 6% year over year on the back of solid revenues. Its first-quarter operating revenues of $635 million surpassed the Zacks Consensus Estimate by 9.1%. The top line even soared 53% year over year, driven by higher gross premiums written and net investment income. Net investment income is $81.5 million for the reported quarter, surging 44.2% year over year.
The company has been witnessing increasing gross premiums written, backed by premium growth at both its Casualty and Specialty plus Property segments. The metric has doubled over a span of five years, evident from its four-year CAGR (2014 to 2018) of 20.88%, primarily led by strong segmental results. This consistent premium growth is likely to drive the top line further for RenaissanceRe.
The company has been actively undertaking divestitures in order to streamline its operations by eradicating low-return high-risk businesses. It is also acquiring and expanding businesses to boost growth opportunities, which poise it well for long-term growth.
In order to add shareholder value, the company has been aggressively deploying its excess capital over the last many quarters via continuous dividend hikes. The company also buys back shares to enhance shareholder value. These continuous efforts are likely to retain investor optimism on the stock.
The Zacks Consensus Estimate for the company’s current-year earnings is pegged at $12.17, indicating an increase of 32.7% from the year-ago reported figure on revenues of $2.62 billion, which again implies a 21.2% rise from the prior-year reported number.
For 2020, the Zacks Consensus Estimate for earnings stands at $13.47 on $2.83 billion revenues, implying a respective 10.7% and 8.1% improvement from the year-earlier reported figure.
Stocks to Consider
Investors interested in the same space might look into some better-ranked stocks like Kinsale Capital Group, Inc. KNSL, Argo Group International Holdings, Ltd. ARGO and Hallmark Financial Services, Inc. HALL, each sporting a Zacks Rank of 1. You can see the complete list of today’s Zacks #1 Rank stocks here.
Kinsale Capital provides casualty and property insurance products in the United States. The company delivered a beat in two of the last four quarters, the average positive surprise being 7.55%.
Argo Group underwrites specialty insurance and reinsurance products in the property and casualty markets. It pulled off average trailing four-quarter positive surprise of 224.07%.
Hallmark Financial underwrites, markets, distributes and services property/casualty insurance products in the United States. The company came up with average four-quarter beat of 98.45%.
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