On Feb 19, Zacks Investment Research upgraded ACE Limited (ACE) to a Zacks Rank #1 (Strong Buy).
Why the Upgrade?
ACE Limited has been witnessing rising earnings estimates on the back of sturdy fourth-quarter 2013 results. Moreover, this well-known property and casualty insurer delivered positive earnings surprises in the last 4 quarters with an average beat of nearly 16%. The long-term expected earnings growth rate for this stock is 10%.
ACE Limited reported its fourth-quarter results on Jan 28. Non-GAAP earnings per share came in at $2.39, surpassing the Zacks Consensus Estimate by 19.5% and the year-ago earnings by 67%.
Solid underwriting performances aided the better-than-expected results. Absence of any significant cat activities boosted the upside. Premium revenues witnessed improvement globally. Results also gained from positive prior-year reserve development. ACE Limited continues to benefit from better commercial P&C pricing environment in the U.S., enjoying another quarter of rate increase.
Full-year earnings results also surpassed expectation. ACE Limited posted record earnings of $9.35 per share which climbed 22.2% year over year and exceeded the Zacks Consensus Estimate by 4.3%. Earnings comfortably surpassed the company-provided guidance of $8.65–$8.90 per share.
In addition, ACE Limited remains committed toward returning value to its shareholders. The board approved a 24% increase in quarterly dividend and a new share repurchase authorization of $2 billion shares through Dec 31, 2014. ACE Limited eyes repurchase of $1.5 billion worth of shares by 2014-end.
The Zacks Consensus Estimate for 2014 increased 3.3% to $8.66 per share as most of the estimates were revised higher over the last 30 days. For 2015, one-third of the estimates were revised higher over the same time frame, lifting the Zacks Consensus Estimate by 2.5% to $9.09 per share.
Other Stocks to Consider
Other players in the property and casualty industry, which look attractive at current levels, include AmTrust Financial Services, Inc. (AFSI), RLI Corp. (RLI) and Navigators Group Inc. (NAVG). All these stocks carry the same Zacks Rank as ACE Limited.
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