Here's Why Investors Should Buy W.R. Berkley (WRB) Stock
W.R. Berkley Corporation WRB is well poised for growth, given a strong insurance business, growing international business and efficient capital deployment.
This Zacks Rank #2 (Buy) property and casualty insurer’s return on equity was 10.6% in the trailing 12-month period, higher than the industry average of 6.4%. Return on equity is a profitability measure that identifies the company’s efficiency in utilizing its shareholders’ funds.
The company has a decent earnings surprise history. It beat estimates in the trailing four quarters, the average positive surprise being 27.38%.
Now let’s see what makes the stock an investors’ favorite.
The insurance business of the company has witnessed premium growth over the past years. In 2019, the insurance business earned 92.5% of net premium written, supported by several new start-up units in varied business lines. Better pricing also added to the top line of the company.
The emerging international business across the U.K., Continental Europe, South America, Canada, Scandinavia, Asia and Australia has been boosting premium growth over the years.
W.R. Berkley’s solid balance sheet and steady cash flow help it deploy capital efficiently. The company hikes dividend each year, apart from paying out special dividends and buying back shares. In June 2019, the company declared a 10% hike in regular dividends (the 14th consecutive dividend hike) and in November 2019, it approved a special dividend of 75 cents (the 11th straight special dividend). Its current dividend yield of 0.8% compares favorably with the industry average of 0.5%, making it an attractive pick for investors.
Estimates for W.R. Berkley have been revised upward over the past 60 days, reflecting analysts’ confidence in the stock. The Zacks Consensus Estimate for 2021 earnings per share has moved 9.2% north in the said timeframe.
The Zacks Consensus Estimate for 2021 earnings per share is pegged at $3.20, indicating an increase of nearly 6.7% from the year-ago quarter’s reported figure. The expected long-term earnings growth rate is 9%, which is better than the industry average of 8.5%.
It has a favorable Growth Score of B. This style score identifies growth prospects of a company. Back-tested results show that stocks with a Growth Score of A or B combined with a Zacks Rank #1 (Strong Buy) or 2 offer best growth opportunities.
Shares of W.R. Berkley have lost 9.9% in a year’s time compared with the industry’s decline of 10.9%. Nevertheless, its premium growth, expanding international business and solid capital position are expected to drive the company’s shares in the near term.
Other Stocks to Consider
Some other top-ranked stocks from the space include Donegal Group Incorporation DGICA, First American Financial Corporation FAF and Markel Corporation MKL. While Donegal Group Incorporation and First American Financial sport a Zacks Rank #1, Markel carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Donegal Group surpassed estimates in the last four quarters, the average positive surprise being 271.06%.
First American surpassed estimates in the last four quarters, the average positive surprise being 17.68%.
Markel surpassed estimates in two of the last four quarters. The four-quarter beat is 23.14%, on average.
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