Subscribe to Entrepreneur for $5
Subscribe

Here's Why Hold is an Apt Strategy for AXIS Capital (AXS)

AXIS Capital (AXS) continues to build on its Specialty Insurance, Reinsurance plus Accident and Health portfolio coupled with an improved portfolio mix.

By
This story originally appeared on Zacks

AXIS Capital Holdings Limited AXS is poised for growth on solid Specialty Insurance, Reinsurance plus Accident and Health insurance portfolio, exit from underperforming lines, investment in more attractive markets, and entry into new markets, which improve its portfolio mix and underwriting profitability. A solid balance sheet and favorable growth estimates make AXIS Capital stock worth retaining in one’s portfolio.

The company has a solid track record of beating earnings estimates in the last six quarters.

- Zacks

Zacks Rank & Price Performance

AXIS Capital currently carries a Zacks Rank #3 (Hold). Year to date, the stock has gained 3.6%, compared with the industry’s increase of 9.4%.

Zacks Investment ResearchImage Source: Zacks Investment Research

Growth Projections

The Zacks Consensus Estimate for AXIS Capital’s 2021 earnings is pegged at $4.21, indicating a 302.4% increase from the year-ago reported figure on 8.5% higher revenues of $5.1 billion. The consensus estimate for 2022 earnings is pegged at $5.55, indicating an increase of 31.8% year over year on 6.1% higher revenues of $5.4 billion.

The long-term earnings growth rate is currently pegged at 5%. It has a Growth Score of A.

Style Score

AXIS Capital has an impressive VGM Score of A. This style score rates stocks on their combined weighted styles, helping to identify those with the most attractive value, best growth, and momentum.

Business Tailwinds

AXIS Capital continues to build on its Specialty Insurance, Reinsurance plus Accident and Health portfolio coupled with an improved portfolio mix.

This leading specialty insurer and a global reinsurer, aiming for leadership in specialty risks, forayed into the pet insurance market. The insurer is growing Marine Cargo, Cyber and Renewable Energy insurance businesses, which are likely to provide strong double-digit ROE opportunities. AXS thus remains focused on markets that promise growth.

AXIS Capital’s combined insurance and reinsurance portfolios have witnessed average rate increases in double digits owing to strong rate increases from every line of business.

The insurer remains focused on improving margin while reducing the expense ratio thus improving profitability.

AXIS Capital scores strongly with credit rating agencies.

Solid Dividend History

The company has been hiking dividends for the last 18 years. Its dividend increased at an 18-year CAGR of 7.1%. Its current dividend yield of 3.3% is better than the industry average of 0.4%. AXIS Capital boasts one of the highest dividend yields among its peers.

Stocks to Consider

Some better-ranked stocks from the same space include First American Financial FAF, Fidelity National Financial FNF and Cincinnati Financial Corporation CINF.

First American sports a Zacks Rank #1 (Strong Buy). The Zacks Consensus Estimate for 2021 earnings indicates a 22% year-over-year increase.  First American delivered a four-quarter average earnings surprise of 29.19%. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for 2021 and 2022 earnings of Fidelity National, sporting a Zacks Rank #1, has moved up 6.1% and 4.6%, respectively in the past seven days. Fidelity National delivered a four-quarter average earnings surprise of 38.18%.

Cincinnati Financial carries a Zacks Rank #2 (Buy). The Zacks Consensus Estimate for 2021 earnings implies a 64% year-over-year increase. Cincinnati Financial delivered a four-quarter average earnings surprise of 40.05%.

Shares of First American Financial, Fidelity National and Cincinnati Financial have gained 50.1%, 30.3% and 34.8%, respectively in a year.  

 



Infrastructure Stock Boom to Sweep America

A massive push to rebuild the crumbling U.S. infrastructure will soon be underway. It’s bipartisan, urgent, and inevitable. Trillions will be spent. Fortunes will be made.

The only question is “Will you get into the right stocks early when their growth potential is greatest?”

Zacks has released a Special Report to help you do just that, and today it’s free. Discover 7 special companies that look to gain the most from construction and repair to roads, bridges, and buildings, plus cargo hauling and energy transformation on an almost unimaginable scale.

Download FREE: How to Profit from Trillions on Spending for Infrastructure >>

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

 

Cincinnati Financial Corporation (CINF): Free Stock Analysis Report

 

Axis Capital Holdings Limited (AXS): Free Stock Analysis Report

 

First American Financial Corporation (FAF): Free Stock Analysis Report

 

Fidelity National Financial, Inc. (FNF): Free Stock Analysis Report

 

To read this article on Zacks.com click here.

 

Zacks Investment Research