We expect property and casualty insurer
XL Group plc
) to beat expectations when it reports its first-quarter 2014
results on May 1.
Why a Likely Positive Surprise?
Our proven model shows that XL Group is likely to beat earnings
because it has the right combination of two key ingredients.
Positive Zacks ESP
: Expected Surprise Prediction or
, which represents the difference between the Most Accurate
estimate and the Zacks Consensus Estimate, is +2.82%. This is a
meaningful and leading indicator of a likely positive earnings
surprise for shares.
Zacks Rank #3 (Hold)
: XL Group has a Zacks Rank #3. Note that stocks with Zacks Rank
#1, 2 and 3 have significantly higher chances of beating
earnings. The Sell-rated stocks (#4 and 5) should never be
considered going into an earnings announcement.
The combination of XL Group's Zacks Rank #3 and +2.82% ESP makes
us confident of a positive earnings beat.
What is Driving the Better-than-Expected
A benign cat environment favoring better underwriting results,
are expected to drive XL Group's results in the first quarter.
The company's acquisitions, intended to capitalize on the
opportunities in hand, are also expected to enhance results.
Moreover, a lower share count, aided by the company's buybacks
efforts, should drive the bottom line.
The positive trend is backed by the trailing four-quarter average
beat of 18.3%, much of which was contributed by the 38.8%
positive surprise achieved in the first quarter of 2013. The last
reported quarter benefitted from lower natural catastrophe losses
due to a benign cat environment and higher net income from
investment funds and investment manager operating affiliates.
Other Stocks to Consider
Here are some other companies you may want to consider as our
model shows they have the right combination of elements to post
an earnings beat this coming quarter:
AXIS Capital Holdings Limited
), earnings ESP of +3.28% and a Zacks Rank #2 (Buy).
RenaissanceRe Holdings Ltd
), earnings ESP of +3.15% and a Zacks Rank #1 (Strong Buy).
The Allstate Corporation
), earnings ESP of +0.88% and a Zacks Rank #3 (Hold).
ALLSTATE CORP (ALL): Free Stock Analysis
AXIS CAP HLDGS (AXS): Free Stock Analysis
RENAISSANCERE (RNR): Free Stock Analysis
XL GROUP PLC (XL): Free Stock Analysis Report
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