Yahoo Finance Here's Why Kinsale Capital (KNSL) Stock is a Solid Pick Now
Kinsale Capital Group, Inc. KNSL is well-poised for growth on the back of solid Excess & Surplus (“E&S”) market, strong premium growth, low expense ratio, higher margins and prudent capital deployment.
Growth Projections
The Zacks Consensus Estimate for Kinsale Capital’s 2023 earnings is pegged at $10.32, indicating a 32.3% increase from the year-ago reported figure on 35.8% higher revenues of $1.11 billion. The consensus estimate for 2024 earnings is pegged at $12.41, indicating a 20.2% increase from the year-ago reported figure on 20.4% higher revenues of $1.34 billion.
Northbound Estimate Revision
The Zacks Consensus Estimate for 2023 and 2024 has moved 4% and 3.9% north, respectively, in the past 30 days, reflecting analysts’ optimism.
Earnings Surprise History
Kinsale Capital has a solid earnings surprise history. It beat estimates in each of the last four quarters, the average being 14.77%.
Zacks Rank & Price Performance
Shares of this Zacks Rank #1 (Strong Buy) property and casualty insurer have gained 60.6% in a year, outperforming the industry’s growth of 4.2%. We expect the company’s policy to ramp up its growth profile and capital position and drive shares higher.
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Return on Equity (ROE)
Kinsale Capital’s operating ROE of 28.3% expanded 650 basis points year over year in the first quarter of 2023. For the long term, KNSL even targets to maintain operating ROE in the mid-teens range.
Business Tailwinds
Kinsale Capital’s premium income is expected to improve in the near term on the back of higher submission activity from brokers and increased rates across most lines of business, resulting from continued favorable conditions in the E&S market.
The combination of highly controlled underwriting combined with advanced technology-driven low costs and a focus on the Excess and Surplus Lines Insurance market is driving the profitability and growth of Kinsale Capital.
The Excess and Surplus Lines insurance segment continues to witness rapid growth owing to dislocation in the overall property and casualty market.
A combination of premium growth and favorable rate increases from a strong underwriting environment and lower levels of operating expenses relative to premium growth and management's cost control efforts are expected to drive the underwriting income of the insurer.
The expense ratio is expected to gain from lower net commissions incurred and lower other underwriting expenses as a percentage of earned premiums, economies of scale from premium expansion and management's continued focus on controlling costs.
Strong cash flows enable Kinsale Capital to engage in shareholder-friendly moves like dividend hikes. Banking on solid cash flow, KNSL has increased dividends since 2017 at an eight-year CAGR (2016-2023) of 13.7%.
Kinsale Capital has an impressive Growth Score of B. This style score helps analyze the growth prospects of a company. Back-tested results have shown that stocks with a favorable Growth Score when combined with a solid Zacks Rank offer better returns.
Other Stocks to Consider
Some other top-ranked stocks from the property and casualty insurance industry are HCI Group, Inc. HCI, RLI Corp. RLI and Axis Capital Holdings Limited AXS. While HCI Group and RLI Corp. sport a Zacks Rank #1, Axis Capital carries a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
HCI Group beat estimates in three of the last trailing four quarters and missed in one, the average being 308.82%. In the past year, HCI has lost 14.9%.
The Zacks Consensus Estimate for HCI’s 2023 and 2024 earnings per share indicates a year-over-year increase of 116.42% and 122.22%, respectively.
RLI Corp.’s earnings surpassed estimates in each of the last trailing four quarters, delivering an average earnings surprise being 45.50%. In the past year, RLI Corp. has gained 15.7%.
The Zacks Consensus Estimate for RLI’s 2023 earnings has moved 2.9% north in the past seven days.
Axis Capital beat estimates in three of the last four quarters and missed in one, the average being 6.50%. The Zacks Consensus Estimate for 2023 has moved 2.7% north in the past 30 days.
The Zacks Consensus Estimate for AXS’ 2023 and 2024 earnings per share is pegged at $7.70 and $8.60, indicating a year-over-year increase of 32.5% and 11.7%, respectively. In the past year, AXS has lost 0.4%.
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RLI Corp. (RLI) : Free Stock Analysis Report
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HCI Group, Inc. (HCI) : Free Stock Analysis Report
Kinsale Capital Group, Inc. (KNSL) : Free Stock Analysis Report
