On Jul 8, 2014, shares of Everest Re Group Ltd. (RE) reached a new 52-week high of $163.80. Over the past one year, the stock price of this Zacks Rank #3 (Hold) stock has soared, thanks to the company’s effective capital deployment and strong earnings.
The shares gained 31% in the one-year period to close at $163.61 in the last trading session. Moreover, Everest Re’s one-year return of 27.53% was higher than the S&P 500’s return of 20.32% and that of the other industry players like RenaissanceRe Holdings Ltd. (RNR), PartnerRe Ltd. (PRE) and Montpelier Re Holdings Ltd. (MRH) that recorded returns of 24.66%, 23.96% and 20.21% respectively.
Over the past one year, Everest Re has undertaken significant capital deployment initiatives that reflect the company’s financial strength and at the same time, its incessant efforts to boost shareholders’ worth. In the second quarter last year, the company amended the existing share repurchase program to purchase up to 25 million shares from 20 million authorized earlier. Everest Re’s strong financial position has enabled it to realize this goal and the company had successfully completed the buyback of 22.1 million shares till the last reported quarter, under this authorization.
Everest Re’s efficient capital management is also evident from its continuous dividend payouts. In Nov 2013, the company increased its quarterly cash dividend by 56% to 75 cents per share from 48 cents per share paid earlier. Moreover, continuing its steady dividend payouts, Everest Re disbursed its quarterly dividend of 75 cents on Jun 18, 2014.
The current dividend yield of the company is 1.83%, better than other players like Montpelier and RenaissanceRe that have a yield of 1.55% and 1.08% respectively. Further, with cash flow increasing by 42% to $367.1 million in the first quarter, there is still much upside left with respect to its capital deployment programs.
Earlier, the company reported first-quarter 2014 earnings that surpassed the Zacks Consensus Estimate by 13.82%. Results were also higher than the year-ago quarter earnings by 0.9%, driven by strong underwriting results. Notably, the company delivered positive earnings surprises in three out of the last four quarters with an average beat of 12.17%.
This further brightens the outlook for the coming quarters. The long-term growth rate of this stock is 6.9%.
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