Why the Upgrade?
W.R. Berkley delivered positive earnings surprises in 3 out of the last 4 quarters with an average beat of 15.3%. The long-term earnings growth of the company is presently pegged at 9.5%.
We expect the property and casualty insurer to surpass expectations when it reports its second-quarter results on Jul 22. Our proven model shows that the property and casualty insurer is likely to beat earnings because it has a right combination of a positive Earnings ESP (Read: Zacks Earnings ESP: A Better Method) and Zacks Rank #1. ESP or Expected Surprise Prediction, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, is at +1.47%.
Additionally, for the second quarter, the Zacks Consensus Estimate is pegged at 68 cents, up 4.4% year over year. The Zacks Consensus Estimate for 2013 increased 0.3% to $2.89 per share over the last 60 days, reflecting a year-over-year increase of 10.6%. The same for 2014 is pegged at $3.18, translating to a 10.3% year-over-year improvement.
W.R. Berkley is witnessing stable retention even with a general rate hike for the past many quarters. It is also successful in maintaining the trend of premium growth. The company's investments in a number of start-ups over the last four years have enabled it to capitalize on the improved market scenario. Its International business is another area, which will fuel long-term earnings growth.
Moreover, W.R. Berkley's strong operational performances support its commitment to return value to its shareholders. In May, the board approved an 11% dividend hike, representing a new annualized rate of 40 cents per share and a yield of 0.96%.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.