Why the Upgrade?
W.R. Berkley's earnings estimates rose on the back of its prudent capital deployment which includes declaring a special dividend.
On Dec 8, W.R. Berkley's board of directors declared a special cash dividend of $1.00 per share to return more value to its investors. The special dividend will be paid to the stockholders on Dec 30, 2014 as a record of Dec 18, 2014. This payout is in addition to the cash dividend of 11cents declared earlier. Previously, the company had paid a special dividend in Dec 2012.
The announcement of this special dividend reflects W.R. Berkley's strong financial position and consequently cements our confidence in its financial future.
The property and casualty insurer's board of directors also hiked its annual dividend by 10% to 44 cents per share in May this year. This represents the tenth consecutive increase from 12 cents a share in 2005. Further, in Feb 2014, the company also expanded its share buyback authorization to 10 million shares. These efforts by the company helped to retain investor confidence as well as attract potential investors to the stock.
With respect to earnings performance W.R. Berkley has been delivering positive surprises in the trailing four quarters with an average beat of 15.05%. In the third quarter, W.R. Berkley reported operating income of $1.06 per share, outperforming the Zacks Consensus Estimate by 16.5% and improving 37.7% year over year in the third-quarter 2014. The earnings beat came on the back of growth in premiums written, investment income and capital gains.
Riding on the strength of prudent capital deployment, W.R. Berkley has been witnessing rise in the Zacks Consensus Estimate in the last 60 days. For 2014, the Zacks Consensus Estimate increased by 0.5% to $3.80 as 2 out of 7 estimates move north and for 2015 it rose 0.5% to $3.77 as 1 out of 7 estimates move north. The long term growth is targeted at 9.00%.
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