Insurance stocks continue to stand out among the financial sector with quite a few making their way onto the Zacks Rank #1 (Strong Buy) list.
To that point, many insurance industries are expected to benefit from rate cuts, which will likely reduce the borrowing costs for insurance companies. Furthermore, lower interest rates should increase consumer spending for insurance-related products.
Keeping this in mind, Axis Capital Holdings AXS and Mercury General (MCY) are two of these highly-ranked insurance stocks that investors shouldn’t overlook.
AXS & MCY Stock Price Performance
Notably, Axis Capital and Mercury General’s Zacks Insurance-Property and Casualty Industry is in the top 8% of over 250 Zacks industries with their stellar growth and generous dividends keeping investors engaged.
As a global provider of specialty insurance and reinsurance solutions, Axis Capital’s stock has soared over +40% this year with Mercury General shares up nearly +70% as a writer for all risk classifications of automobile insurance in California among other states.
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AXS vs. MCY: EPS Growth & Valuation
More intriguing is that Axis Capital’s stock still trades at just 7.4X forward earnings with annual earnings per share (EPS) expected to rise 9% in fiscal 2024 and projected to increase another 8% in FY25 to $11.64 per share. Notably, FY24 and FY25 EPS estimates are up over 5% in the last 60 days.
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Despite a very sharp year to date rally, Mercury General’s stock trades at a 15.8X forward earnings multiple which is nicely beneath the S&P 500’s 24.3X and closer to the industry average of 13.6X.
Most daunting is that Mercury General’s EPS is now expected to skyrocket over 1000% this year to $4.00 versus earnings of $0.30 a share in 2023. Plus, FY25 EPS is projected to soar another 50% to $6.00.
Betters still, earnings estimate revisions for FY24 and FY25 have increased 16% and 54% in the last two months respectively.
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AXS & MCY Stocks: Generous Dividends
The cherry on top is that Axis Capital and Mercury General have annual dividend yields over 2% to impressively trump the industry average of 0.26% and the S&P 500’s 1.24%.
Image Source: Zacks Investment Research
Bottom Line
At their current levels, the positive trend of earnings estimate revisions certainly alludes to more upside in these highly-ranked insurance stocks with now still being an ideal time to buy.
Zacks Names #1 Semiconductor Stock
It's only 1/9,000th the size of NVIDIA which skyrocketed more than +800% since we recommended it. NVIDIA is still strong, but our new top chip stock has much more room to boom.
With strong earnings growth and an expanding customer base, it's positioned to feed the rampant demand for Artificial Intelligence, Machine Learning, and Internet of Things. Global semiconductor manufacturing is projected to explode from $452 billion in 2021 to $803 billion by 2028.
See This Stock Now for Free >>Axis Capital Holdings Limited (AXS) : Free Stock Analysis Report
Mercury General Corporation (MCY) : Free Stock Analysis Report
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