Chubb Reaches New 52-week high - Analyst Blog
04 Avril 2013 - 2:04PM
Zacks
On Apr 3, 2013, shares of The Chubb Corporation
(CB) reached a 52-week high of $88.70.
At the end of February, the board of directors of Chubb approved a
7.3% increase in quarterly dividend. With the increased dividend of
44 cents, its dividend yield comes to 2.01%, better than the sector
average of 1.69%. The board also approved a new $1.3 billion share
repurchase program
Given a superior franchise and a significant presence in its niche
market, Chubb is adequately poised to benefit from the expected
turn in the insurance pricing cycle. The company has already
started to witness growth in its Commercial and Personal lines
segments. Its International business is growing rapidly and we
expect it to fuel the long-term earnings. The long-term expected
earnings growth rate for this stock is 9.3%.
Chubb reported positive earnings surprise for all 4 quarters in
2012, with an average beat of 49.4%. Further, our proven model
shows that this property and casualty insurer is likely to beat
earnings in the first quarter of 2013 because it has a right
combination of Positive Zacks ESP (Read: Zacks Earnings ESP: A
Better Method) and Zacks Rank #2 (Buy). ESP or Earnings Surprise
Prediction, which represents the difference between the Most
Accurate estimate and the Zacks Consensus Estimate, is 8.28%. Chubb
is scheduled to release its first-quarter results on Apr 25 after
the market closes. The Zacks Consensus Estimate for the first
quarter of 2013 is currently pegged at 77 cents.
However, the valuation of Chubb looks stretched. The shares are
trading at a premium to peer group average both on a forward
price-to-earnings basis, and on a price-to-book value basis.
Moreover, return on equity of 8.9% is lower than the peer group
average. The 1-year return from the stock is 26.5%, much above
S&P’s return of 10.3%.
Chubb presently carries a Zacks Rank #2 (Buy). Property and
casualty insurers like AXIS Capital Holdings Ltd.
(AXS), Montpelier Re Holdings Ltd. (MRH) and
Arch Capital Group Ltd. (ACGL), among others,
carry a 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
CHUBB CORP (CB): Free Stock Analysis Report
MONTPELIER RE (MRH): Free Stock Analysis Report
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