Yahoo Finance Reinsurance Group (RGA) Up 28.4% YTD: More Room for Growth?
Reinsurance Group of America, Incorporated’s RGA shares have jumped 28.4% year to date compared with the industry's growth of 6.9%. The Finance sector and the Zacks S&P 500 index have gained 4.3% and 15.2% in the said time frame, respectively. With a market capitalization of $13.7 billion, the average volume of shares traded in the last three months was 0.3 million.
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New business volumes, favorable longevity experience, an improving interest rate environment, a diversified business and effective capital deployment were the primary drivers of the uptrend.
This Zacks Rank #1 (Strong Buy) life insurer delivered a four-quarter average earnings surprise of 19.48%.
Reinsurance Group has a VGM Score of A. The VGM Score helps identify stocks with the most attractive value, best growth and promising momentum.
Back-tested results show that stocks with a VGM Score of A or B and Zacks Rank #1 or 2 (Buy) offer the best opportunities in the value investing space.
Will the Bull Run Continue?
The Zacks Consensus Estimate for Reinsurance Group’s 2024 earnings per share indicates a year-over-year increase of 5.3%. The consensus estimate for revenues is pegged at $20.91 billion, implying a year-over-year improvement of 9.7%.
The consensus estimate for 2025 earnings per share indicates an increase of 4.9% from the corresponding 2024 estimate.
Earnings have grown 10.4% in the past five years, better than the industry average of 5.9%
RGA has an impressive Growth Score of B. This style score helps analyze the growth prospects of a company.
Its compelling product portfolio and operational expertise help Reinsurance Group maintain its leadership position in the United States, Latin America and Canada.
Significant value embedded in the in-force business helps generate predictable long-term earnings. Product line expansion contributes to risk diversification and matured individual mortality and provides a base for stable earnings and capital generation.
Reinsurance Group’s longevity insurance provides a source of diversified income and acts as a hedge to a large mortality position. Increasing demand for longevity insurance poises it well for long-term growth.
Life insurers are direct beneficiaries of an improving interest rate environment. Though the Fed has stalled rate increases for some time, it has already made 11 hikes since 2022.
A high-quality investment portfolio and the company’s diversified business across asset classes, sectors, issuers and geography are positives.
RGA’s solid capital position with excess capital of around $0.6 billion offers sufficient financial flexibility and supports effective capital deployment.
Reinsurance Group expects to remain active in deploying capital into attractive growth opportunities in organic flow and in-force block transactions and returning excess capital to shareholders through dividends and share repurchases. On Jan 23, 2024, the company’s board authorized a share repurchase program for up to $500 million of RGA’s outstanding common stock.
Return on equity (ROE) is a profitability metric that measures how effectively the company is utilizing its shareholders' funds. In the first quarter of 2024, the adjusted operating ROE (excluding accumulated other comprehensive income) was 14.8%, which expanded 360 basis points year over year. This shows the company’s relative efficiency in managing shareholders’ funds.
The life insurer has an impressive Value Score of A, reflecting an attractive stock valuation. The insurer has a trailing 12-month P/B ratio of 1.43, lower than the industry range of 1.77.
The Zacks Consensus Estimate for 2024 and 2025 has moved 7.9% and 3.8% north, respectively, in the past 60 days, reflecting analysts’ optimism on the stock.
Other Stocks to Consider
Some other top-ranked stocks from the insurance industry are Radian Group Inc. RDN, Old Republic International Corporation ORI and EverQuote, Inc. EVER, each carrying a Zacks Rank #2 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Radian Group has a solid track record of beating earnings estimates in each of the trailing four quarters, the average being 22.79%. In the past year, shares of RDN have jumped 21.8%.
The Zacks Consensus Estimate for RDN’s 2024 and 2025 revenues implies year-over-year growth of 8.2% and 4.9%, respectively.
Old Republic International has a solid track record of beating earnings estimates in three of the last four quarters while missing in one, the average being 6.61%. In the past year, shares of ORI have climbed 23%.
The Zacks Consensus Estimate for ORI’s 2024 and 2025 earnings implies year-over-year growth of 3.8% and 4.4%, respectively.
EverQuote has a solid track record of beating earnings estimates in each of the trailing four quarters, the average being 65.16%. In the past year, shares of EVER have skyrocketed 181.4%.
The Zacks Consensus Estimate for EVER’s 2024 and 2025 earnings implies year-over-year growth of 103.2% and 273.3%, respectively.
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Radian Group Inc. (RDN) : Free Stock Analysis Report
Reinsurance Group of America, Incorporated (RGA) : Free Stock Analysis Report
EverQuote, Inc. (EVER) : Free Stock Analysis Report
Old Republic International Corporation (ORI) : Free Stock Analysis Report
