Why Is RLI Corp. (RLI) Up 3.4% Since Last Earnings Report?
It has been about a month since the last earnings report for RLI Corp. (RLI). Shares have added about 3.4% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is RLI Corp. due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
RLI Misses Earnings and Surpasses Revenue Estimates in Q3
RLI Corp.’s third-quarter 2018 operating earnings of 44 cents per share missed the Zacks Consensus Estimate by 14.5%. Nevertheless, the bottom line skyrocketed from earnings of 4 cents in the year-ago quarter.
The company witnessed improved premiums across most of its product lines along with higher net investment income in the reported quarter. However, these were partially offset by losses from Hurricane Florence.
Operational Performance
Operating revenues for the reported quarter totaled $217.129 million, up 10.7% year over year. The upside can be attributed to higher net premiums earned as well as net investment income. Also, the top line outpaced the Zacks Consensus Estimate by 1.2%.
Gross premiums written increased 8.5% year over year to $239.1 million. The upside can be attributed to solid performance in the Casualty and Property segments.
Total expenses declined 10.6% year over year to $197.9 million, primarily due to lower loss and settlement expenses.
Net investment income improved nearly 15% year over year to $16.3 million. Total return from the investment portfolio was 1.5%.
The company reported underwriting income of $7.8 million, against the year-ago quarter’s loss of $14.9 million. The improvement was driven by better results in the Property and Surety segments, partially offset by weak performance in the Casualty segment. Loss from Hurricane Florence lowered underwriting income by $6.4 million.
Combined ratio surged 1210 basis points year over year to 96.1%.
Financial Update
The company exited the third quarter with total investments and cash of $2.2 billion, up 4.2% from the tally as of 2017 end.
Book value was $19.60 per share as of Sep 30, 2018, up 5% from the tally as of Dec 31, 2017.
Long-term debt was $149.1 million, which inched up 0.1% from the figure at 2017-end.
Statutory surplus grew 13.2% to $978.9 million at Sep 30, 2018 from the tally as of Dec 31, 2017.
Net cash flow from operations declined 11.2% to $63.4 million in the quarter under review.
Dividend Payout
On Sep 20, 2018, the company paid out a cash dividend of 22 cents per share. In the past five years, the P&C insurer’s total cumulative dividends amounted more than $616 million.
How Have Estimates Been Moving Since Then?
Analysts were quiet during the last two month period as none of them issued any earnings estimate revisions. The consensus estimate has shifted -7.41% due to these changes.
VGM Scores
At this time, RLI Corp. has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with a D. Following the exact same course, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
RLI Corp. has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
RLI Corp. (RLI) : Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research
