We expect property & casualty insurer RenaissanceRe Holdings Ltd. RNR to beat expectations when it reports first-quarter 2015 earnings on May 5, 2015.
Why a Likely Positive Surprise?
Our proven model shows that RenaissanceRe is likely to beat earnings because it has the right combination of two key components.
Zacks ESP: Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is +0.81%. This is very meaningful and a leading indicator of a likely positive earnings surprise for shares.
Zacks Rank: RenaissanceRe carries a Zacks Rank #2 (Buy). Note that stocks with Zacks Rank #1 (Strong Buy), 2 or 3 (Hold) have a significantly higher chance of beating earnings. Conversely, the Sell-rated stocks (#4 and 5) should never be considered going into an earnings announcement, especially when the company is witnessing negative estimate revisions.
The combination of RenaissanceRe’s Zacks Rank #2 and +0.81% ESP makes us confident of an earnings beat this season.
What's Driving the Better-Than-Expected Earnings?
RenaissanceRe has been consistently working toward strengthening its operations and core competency to cater to its clients more efficiently and thus, attract more new clients. This, in turn, should help the company generate higher revenues and witness an improved bottom line in the quarter.
Moreover, the acquisition of Platinum Underwriters Holdings, Ltd. in the quarter has not only made RenaissanceRe’s portfolio lucrative to its existing and potential clients through the expansion of its underwriting, product and capital solutions capabilities, but also bolstered its market presence. This is likely to have driven membership and premiums in the quarter, thus aiding better results. Additionally, enhanced share buyback activities of the company should reduce share count and boost earnings per share.
Other Stocks to Consider
RenaissanceRe is not the only stock looking up this earnings season. We see a likely earnings beat coming from these three companies in the insurance sector as well:
Argo Group International Holdings, Ltd. AGII has an Earnings ESP of +3.41% and a Zacks Rank #3.
The Allstate Corp. ALL has an Earnings ESP of +3.60% and a Zacks Rank #3.
Infinity Property and Casualty Corp. IPCC has an Earnings ESP of +3.00% and a Zacks Rank #3.
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