Validus Upped to Strong Buy - Analyst Blog


On Dec 28, Zacks Investment Research upgraded Validus Holdings, Ltd . ( VR ) to a Zacks Rank #1 (Strong Buy).

Why the Upgrade?

Validus has witnessed rising earnings estimates on the back of solid earnings results. Moreover, this insurance broker delivered positive earnings surprises in the last 4 quarters with an average beat of 24.2%. To return value to its shareholders, the company increased the share repurchase authorization to $500 million. The long-term expected earnings growth rate for this stock is 14.9%.    

In the last reported quarter, Validus's non-GAAP earnings per share came in at $1.56, surpassing the Zacks Consensus Estimate by 21%. An improvement in top line, driven by higher net premiums earned, aided the outperformance.

Underwriting income of Validus increased 16.5% year over year with combined ratio improving 300 basis points.

With regard to enhancing shareholder value, the board of directors of Validus approved an increase in share repurchase authorization to $500 million. The company spent $1.58 billion to buy back 53.4 million shares since the inception of the share repurchase program. It is hence left with $483.1 million remaining under its authorization.

Its dividend yield of 3.04% betters the industry average of 2.95%, as well as that of some other insurance brokers like Marsh & McLennan Companies, Inc. ( MMC ) with a yield of 2.07%, and Willis Group Holdings Public Ltd Co. ( WSH ) with a yield of 2.51%.

The Zacks Consensus Estimate for 2013 increased 0.4% to $5.84 per share over the last 30 days. The estimate translates to a year-over-year increase of 79.1%. For 2014, the same rose by 1.3% to $5.28 per share over the same time frame.

Another Stock to Consider

Another insurance broker worth considering is AON plc ( AON ), carrying a Zacks Rank #2 (Buy).

AON PLC (AON): Free Stock Analysis Report

MARSH &MCLENNAN (MMC): Free Stock Analysis Report

VALIDUS HOLDING (VR): Free Stock Analysis Report

WILLIS GP HLDGS (WSH): Free Stock Analysis Report

To read this article on click here.

Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

This article appears in: Investing , Business , Stocks

Referenced Stocks: AON , MMC , VR , WSH

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