XL Upped to Strong Buy - Analyst Blog


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On February 12, Zacks Investment Research upgraded XL Group Plc ( XL ) to a Zacks Rank #1 (Strong Buy).

Why the Upgrade?

XL has been witnessing rising earnings estimates on the back of strong fourth-quarter 2012 results and an enhanced optimism for 2013. Moreover, this well-known insurance, reinsurance and other financial services provider delivered positive earnings surprises in all of the last four quarters with an average beat of 54.3%. The long-term expected earnings growth rate for this stock is 8.3%

Last week, XL reported fourth-quarter 2012 operating earnings of 13 cents per share, which outpaced the Zacks Consensus Estimate of a loss of 35 cents and a loss of 25 cents in the year-ago quarter. Earnings were primarily escalated due to top-line growth of 11.8% based on the company's conservative underwriting practices and repositioned P&C portfolio. This was coupled with a decline in operating expenses of 14.8% over the prior-year quarter. Improved liquidity and operating leverage have also helped XL to maintain consistencyt with its share repurchase activities, reflecting an accretion in earnings per share in the future.

The Zacks Consensus Estimate for 2013 increased 3.4% to $2.44 per share as most of the estimates were revised higher over the last 7 days, while no downward revision was witnessed. Even for 2014, most of the estimates were revised upward over the same time frame, lifting the Zacks Consensus Estimate by 6.1% to $2.79 per share.    

Other Stocks to Consider

Other strong performers in the insurance sector include White Mountain Insurance ( WTM ), First American Financial Corp. ( FAF ) and RLI Corp. ( RLI ), all of which carry a Zacks Rank #1 (Strong Buy).

FIRST AMER FINL (FAF): Free Stock Analysis Report

RLI CORP (RLI): Free Stock Analysis Report

WHITE MTN INS (WTM): Free Stock Analysis Report

XL GROUP PLC (XL): Free Stock Analysis Report

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Zacks Investment Research

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

This article appears in: Investing , Business , Stocks
More Headlines for: FAF , RLI , WTM , XL

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