On Apr 16, 2013, Zacks Investment Research upgraded
) to a Zacks Rank #1 (Strong Buy).
Why the Upgrade?
Markel has been experiencing rising earnings estimates on the
back of improved fourth-quarter 2012 results. Moreover, the
company's strong underwriting capabilities as well as improved
debt levels and coverage ratios have been impressive.
Additionally, this property-casualty insurer delivered positive
earnings surprises in all of the last 4 quarters with an average
beat of 113.3%.
On Feb 4, Markel reported fourth-quarter 2012 operating
earnings of $5.78 per share, which exceeded the Zacks Consensus
Estimate of a loss of $2.70 and earnings of $5.19 per share in
the year-ago quarter.
Results were supported by 17.9% growth in operating revenue,
driven by higher premiums and net investment income. Although
operating expenses were higher than expected, tax expense
declined significantly and combined ratio improved to 97% from
102% in the year-ago quarter. Even book value per share increased
15% at 2012-end.
Markel's strategy of growth through acquisitions has been
scoring well with the ratings agencies. The latest acquisition of
Alterra Capital Holdings Ltd.
), scheduled to culminate by mid-2013, is further projected to
improve Markel's debt to capital ratio by 100 basis points (bps)
to 27%. Additionally, the acquisition is expected to improve the
debt to equity ratio by 400 bps to 34% over the same time period.
The creditworthiness of the company also helps retain investors'
confidence in the stock.
Based on Markel's fundamental strength and claims management,
the Zacks Consensus Estimate for 2013 rose 1.9% to $19.08 per
share in the last 60 days. The estimate for 2014 is pegged at
$22.45, up 4.9% in the last 60 days. Meanwhile, no downward
revision in estimates was witnessed for both the years.
Moreover, the Most Accurate Estimate for Markel's 2013
earnings stands at $19.50 a share, resulting in a positive
Earnings ESP (Read:
Zacks Earnings ESP: A Better Method
) of +2.2%.
Other Stocks to Consider
Apart from Markel, other stocks that are outperforming in the
insurance sector include
Hilltop Holdings Inc.
Everest Re Ltd.
). Both the stocks carry a Zacks Rank #1 (Strong Buy).
ALTERRA CAP HLD (ALTE): Free Stock Analysis
HILLTOP HLDGS (HTH): Free Stock Analysis
MARKEL CORP (MKL): Free Stock Analysis Report
EVEREST RE LTD (RE): Free Stock Analysis
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