AXIS Capital Hits 52-Week High - Analyst Blog
20 Mars 2013 - 1:03PM
Zacks
On Mar 19, 2013, shares of AXIS Capital Holdings
Limited (AXS) hit a 52-week high of $41.84. Previously,
the company had reported solid fourth-quarter results with an
earnings surprise of 64.9%. This property & casualty insurer
witnessed positive earnings surprises in two of four quarters of
2012, with an average beat of 26.6%.
On Feb 4, AXIS Capital reported fourth-quarter 2012 operating loss
of 23 cents per share, narrower than the Zacks Consensus Estimate
of a loss of $1.18 per share. Total revenue grossed $975.5 billion
in the quarter, improving 3.1% from the year-ago quarter. The top
line comfortably surpassed the Zacks Consensus Estimate of $928
million.
AXIS Capital also continues to benefit from rate increases. The
company noted an improved pricing scenario in the insurance market
place extending across classes and geographies, and expects the
momentum to continue. Looking forward, AXIS Capital expects gross
premiums written to increase in 2013, given favorable pricing
momentum sustains in the primary insurance market.
AXIS Capital has a $750 million share buyback program under its
authorization. Further, the approval of a dividend hike of 4% to 25
cents per share in Dec 2012 marked the 9th consecutive year of
dividend increase.
The absence of any major catastrophe events in the first nine
months of 2012 was beneficial to the underwriting results of the
company. However, the occurrence of Hurricane Sandy in the fourth
quarter altered the picture. Though its exposure to cat loss weighs
on the results, prudent underwriting practices managed to limit the
adverse effect. Nevertheless, AXIS Capital enjoyed underwriting
income of $263.1 million for full year 2012, reversing the year-ago
loss. The combined ratio improved 1610 basis points to 112.2% in
2012.
Valuation for AXIS Capital looks attractive. The shares are trading
at a discount to the peer group average, both on a price-to-book
basis (9.3% discount to peer group average) and forward
price-to-earnings basis (27.7% discount to peer group average),
with return on equity remaining 8.2% above the peer group average.
The 1-year return from the stock is 28.5%, much above S&P’s
return of 10.3%.
We believe that the conservative underwriting practices will help
the company remain well capitalized. New business generation and
platform expansion will also aid AXIS fuel its top-line growth. The
overall long-term expected sales and earnings growth rate for this
stock is 8.2% and 8.5%, respectively.
AXIS Capital presently carries a Zacks Rank # 2 (Buy). Property and
casualty insurers like XL Group plc (XL),
Cincinnati Financial Corp. (CINF) and Arch
Capital Group Ltd. (ACGL), among others, carry a favorable
Zacks Rank # 1 (Strong Buy) and appear impressive.
ARCH CAP GP LTD (ACGL): Free Stock Analysis Report
AXIS CAP HLDGS (AXS): Free Stock Analysis Report
CINCINNATI FINL (CINF): Free Stock Analysis Report
XL GROUP PLC (XL): Free Stock Analysis Report
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