Rising estimates resulting from an excellent quarterly
performance have sent this insurer to Zacks #1 (Strong Buy) rank
and it is the Bull of the day.
About the Company
Alleghany Corporation is a multi-line insurance company,
operating through its subsidiaries, Transatlantic Holdings
(reinsurer), RSUI Group (underwriter of property and liability
specialty Insurance), Capitol Transamerica Corporation (underwriter
of small commercial property,casualty and surety insurance) and
Pacific Compensation Corporation (underwriter of workers'
Excellent First Quarter Results
Alleghany reported its first quarter results on May 6, 2013.
Stockholders' equity per common share increased to $394.71 as of
March 31, 2013, up 4.1% from $379.13 at December 31, 2012. Pre-tax
earnings for the quarter, before merger-related items, came in at
$265.0 million, up from pre-tax earnings, before merger related
items, of $181.8 million for the year-ago quarter.
Zacks consensus estimate for the current quarter has increased
to $6.72 per share from $5.80 per share 60 days ago and similarly,
the estimate for the current year has gone up to $28.50 per share
from $23.15 per share.
The company has delivered a positive earnings surprise in each
of the last four quarters, with an average positive surprise of
For the five years ended December 31, 2012, Alleghany's common
stockholders' equity per share increased at a compound annual rate
of 6.1%, compared with a compound annual rate of return of 1.6% for
the S&P 500 over the same time period.
The Bottom Line
The management believes that with their excellent portfolio of
investments and businesses, they can produce 7-10% growth in book
value per share per year over the long term, and can double
shareholder value at least every ten years.
With an excellent portfolio and exceptional management
philosophy, Alleghany looks like a min-version of Berkshire
Alleghany is a Zacks Rank#1 (Strong Buy) stock. It also has a
Zacks recommendation of "Outperform". Further, the Zacks
Industry rank of 7 (out of 265) also indicates strong potential for
outperformance in the short- to mid-term. I believe that this stock
will be an excellent long-term addition to any portfolio.
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