W.R. Berkley (WRB) Rises 46% YTD: Will the Rally Continue?

Zacks Equity Research

W.R. Berkley Corporation’s WRB shares have gained 46% year to date, outperforming the industry's growth of 1.8% and the Zacks S&P 500 composite’s rise of 14.3%. Solid insurance business, growing international business and improving investment income should continue to drive the stock.

With a market capitalization of $13.2 billion, average volume of shares traded in the last three months was 0.6 million.

 



Why Should the Bull Run Continue

This Zacks Rank #2 (Buy) company, which is the provider of commercial lines property-casualty insurance, has a solid track record of delivering positive earnings surprise in the last 8 quarters, reflecting operational excellence.

W.R. Berkley has an impressive VGM Score of B. The style score helps to identify stocks with the most attractive value, growth and momentum. Back-tested results have shown that VGM Score of A or B, combined with Zacks Rank #1 (Strong Buy) or 2, offers best investment opportunity.

The company’s insurance business, contributing majorly to the net premium written, should continue to benefit from several new startup units in varied business lines (including healthcare, cybersecurity, energy and agriculture) and on growing international markets (including the Asia-Pacific region, South America and Mexico).

W.R. Berkley’s international business has been growing on emerging markets of the U. K., Continental Europe, South America, Canada, Scandinavia, Asia and Australia. This in turn should continue to drive premiums.

W.R. Berkley maintains a solid balance sheet, with sufficient liquidity and strong cash flows. This helps the company engage in effective capital deployment through special dividends, dividend hikes and share repurchases.

The Zacks Consensus Estimate for the company’s 2019 and 2020 earnings indicates year-over-year improvements of 7.1% and 2.1%, respectively.

Impressive inorganic and organic growth profile, rate increases, reserving discipline, solid balance sheet, and prudent capital management policy position the company well for long-term growth. The expected long-term earnings growth is pegged at 9%. It has a favorable Growth Score of B. This style score identifies growth prospects of a company.

Banking on operational strength, the company’s estimates for 2019 and 2020 have moved up 5.9% and 3.2%, respectively, in the past 30 days.

Other Stocks to Consider

Some other top-ranked insurance stocks are James River Group Holdings JRVR, MGIC Investment MTG and Radian Group RDN.

James River provides specialty insurance and reinsurance services in the United States. The company delivered positive earnings surprise of 3.13% in the last reported quarter. The stock sports a Zacks Rank #1 (Strong Buy) at present.  You can see the complete list of today’s Zacks #1 Rank  stocks here.


MGIC Investment provides private mortgage insurance, other mortgage credit risk management solutions, and ancillary services to lenders and government-sponsored entities in the United States. The company delivered positive earnings surprise of 12.20% in the last reported quarter. It currently carries Zacks Rank #2.

Radian Group engages in the mortgage and real estate services business in the United States. The company delivered positive earnings surprise of 14.29% in the last reported quarter. It presently carries Zacks Rank #2.

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