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Here's Why You Should Stay Invested in AXIS Capital (AXS)

AXIS Capital Holdings Limited AXS is poised to gain from its compelling and diversified product portfolio, underwriting excellence, digital capabilities and solid capital position. These, along with solid growth projections, make the stock worth retaining.

This leading specialty insurer and global reinsurer, carrying a Zacks rank #3 (Hold), aiming for leadership in specialty risks, has a VGM Score of B. This helps to identify stocks with the most attractive value, growth and momentum.

An Outperformer

Shares of AXS have rallied 25.7% year to date, compared with the industry’s increase of 14.9%, the Finance sector’s rise of 3.8% and the Zacks S&P 500 composite’s rise of 15%.

Zacks Investment Research
Zacks Investment Research

Image Source: Zacks Investment Research

Return on Capital

AXS’s trailing 12-month return on equity is 19.%, ahead of the industry average of 7.8%. Return on equity, a profitability measure, reflects how effectively a company is utilizing its shareholders.

Also, the return on invested capital (ROIC) in the trailing 12 months was 11.1%, better than the industry average of 5.9%. Its ROIC has been increasing over the last few quarters amid capital investment made over the same time frame. This reflects the company’s efficiency in utilizing funds to generate income.

Northbound Estimates

The Zacks Consensus Estimate for 2024 and 2025 earnings has moved 1 cent north each in the past seven days, reflecting analyst optimism.

Optimistic Growth Projection

The Zacks Consensus Estimate for 2024 earnings is pegged at $10.11, indicating an increase of 2.6% on 4.8% higher revenues of $6 billion. The consensus estimate for 2025 earnings is pegged at $11.01, indicating an increase of 8.9% on 9.1% higher revenues of $6.5 billion.  

The expected long-term earnings growth rate is pegged at 27.1%, better than the industry average of 10.2%. We expect 2026 EPS to witness a three-year CAGR of 6.9%.

Growth Drivers

AXS’s focus on investing in growth areas, including wholesale insurance and lower middle markets, should drive growth. Exiting the volatile catastrophe and property reinsurance space and reducing risk exposure while concentrating on accident and health, casualty, credit and surety, and specialty reinsurance lines should help AXIS Capital achieve its goal of being a leading specialty underwriter.

While a diversified portfolio of global specialty business, leadership positions and growth opportunities across major business lines drives the Insurance segment, the Reinsurance business should benefit from strong cycle management that focuses on improving the business mix.

AXIS Capital is also working with its distribution partners to use expanding digital capabilities to create new business growth in desirable smaller accounts.


Despite the upside potential, there are a few factors that investors should keep an eye on. AXIS Capital is highly exposed to losses resulting from natural disasters, man-made catastrophes and other catastrophic events, which induce volatility in its underwriting profitability.  

This apart, this insurer has been witnessing rising expenses over the last few years due to higher net losses and loss expenses, general and administrative expenses, higher acquisition costs and an increase in interest expense as well as financing costs, which are hurting margins. 

Impressive Dividend History

Axis Capital has an impressive history of distributing wealth to shareholders via dividends and share buybacks. It hiked its dividend for 18 straight years. Its dividend yield is currently 2.5%, way above the industry average of 0.3%. The insurer boasts one of the highest dividend yields among its peers.

Stocks to Consider  

Some top-ranked stocks from the insurance industry are HCI Group, Inc. HCI, Palomar Holdings PLMR and ProAssurance PRA. Each stock presently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

HCI Group’s earnings surpassed estimates in each of the last four quarters, the average beat being 139.15%. In the past year, shares of HCI have gained 7.8%.

The Zacks Consensus Estimate for HCI’s 2024 and 2025 earnings implies 57.6% and 4.3% year-over-year growth, respectively.

Palomar’s earnings surpassed estimates in each of the last four quarters, the average earnings surprise being 15.10%. In the past year, PLMR’s stock has surged 45%.

The Zacks Consensus Estimate for PLMR’s 2024 and 2025 earnings indicates 26% and 18% year-over-year growth, respectively.

ProAssurance earnings surpassed estimates in two of the last four quarters and missed in the other two. In the past year, PRA’s stock has lost 9.1%.

The Zacks Consensus Estimate for PRA’s 2024 and 2025 earnings implies 371.4% and 72.6% year-over-year growth, respectively.


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

ProAssurance Corporation (PRA) : Free Stock Analysis Report

HCI Group, Inc. (HCI) : Free Stock Analysis Report

Palomar Holdings, Inc. (PLMR) : Free Stock Analysis Report

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