Markel Corporation MKL has been gaining momentum, given new business, favorable pricing trends across most of the product lines, higher earned premiums and acquisitions.
Growth Projections
The Zacks Consensus Estimate for Markel’s 2022 and 2023 earnings per share is pegged at $75.53 and $85.45, indicating a year-over-year increase of 27.8% and 13.1%, respectively.
Earnings Surprise History
Markel surpassed estimates in two of the last four reported quarters while missing in the other two, the average beat being 3.59%.
Zacks Rank & Price Performance
Markel currently carries a Zacks Rank #2 (Buy). In the past year, the stock has rallied 10.5%, compared with the industry’s growth of 11.8%.
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Return on Equity (ROE)
Markel’s trailing 12-month return on equity (ROE) was 6%, which expanded 230 basis points year over year. ROE reflects its efficiency in using its shareholders’ funds.
Style Score
Markel has an impressive Value Score of A that reflects an attractive valuation of the stock. The stock remains undervalued at the current level. MKL currently has a trailing 12-month price-to-book value ratio of 1.19, lower than the industry average of 1.40.
Back-tested results show that stocks with a Value Score of A or B, when combined with a Zacks Rank #1 (Strong Buy) or 2, offer the best opportunities in the value investing space.
Business Tailwinds
Riding on solid growth in new business, as well as ongoing favorable pricing trends across most of the product lines, especially within the professional liability and general liability product lines in both the Insurance and Reinsurance segments of Markel, the premium income of the insurer is expected to gain momentum.
The Insurance segment contributed the lion’s share of premiums in 2021. Higher new business volume, favorable rates and higher retention of renewals are likely to boost the performance of this segment. Continued expansion of classic cars business should boost the personal lines product business.
The favorable impact of higher earned premiums as well as lower compensation and general expenses across both the Insurance and Reinsurance segments are likely to improve the expense ratio of Markel.
The combined ratio of the property and casualty insurer should continue to benefit from a lower attritional loss ratio, favorable pricing environment and the impact of underwriting actions taken to enhance profitability.
Markel remains focused on strategic acquisitions to enhance its reinsurance product offerings. With the substantial contribution of revenues from Lansing Building Products, (acquired in April 2020) and Buckner Heavylift Cranes (acquired in August 2021), the top line and EBITDA of the Markel Ventures segment are likely to improve.
Markel seeks to maintain prudent levels of liquidity as well as financial leverage.
Earnings estimates for 2022 have moved up nearly 0.1% in the past 30 days. This should instill investors' confidence in the stock.
Other Stocks to Consider
Some other top-ranked insurers include Kinsale Capital Group KNSL, United Fire Group UFCS and Cincinnati Financial CINF, each sporting a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
Kinsale Capital’s earnings surpassed estimates in each of the last four quarters, the average beat being 32.04%. In the past year, KNSL has rallied 26.5%.
The Zacks Consensus Estimate for Kinsale Capital’s 2022 and 2023 earnings has moved 3.8% and 3.5% north, respectively, in the past seven days.
United Fire’s earnings surpassed estimates in each of the last four quarters, the average earnings surprise being 275.45%. In the past year, UFCS has lost 16.1%.
The Zacks Consensus Estimate for United Fire’s 2022 and 2023 earnings has moved 122.2% and 76.9% north, respectively, in the past 30 days.
The bottom line of Cincinnati Financial surpassed estimates in each of the last four quarters, the average being 38.48%. In the past year, the insurer has rallied 18.8%.
The Zacks Consensus Estimate for Cincinnati Financial’s 2022 and 2023 earnings has moved 5.7% and 5.5% north, respectively, in the past 30 days.
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Cincinnati Financial Corporation (CINF): Free Stock Analysis Report
Markel Corporation (MKL): Free Stock Analysis Report
United Fire Group, Inc (UFCS): Free Stock Analysis Report
Kinsale Capital Group, Inc. (KNSL): Free Stock Analysis Report
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