On Dec 8, Validus Holdings, Ltd. (VR) reached a new 52-week high of $42.35 per share, driven by strong fundamentals and inorganic growth. With roughly 1.1 million shares traded in the last session, the stock finally closed at $42.17, gaining 0.09%.
Shares have gained momentum in the last six months as evident from its return that came in at 10.8%, which was well ahead of the S&P’s return of 5.7%.
Validus has also been keen on driving its inorganic growth. It has sought acquisitions that enhanced its product offerings. Its acquisition of Western World Insurance Group for $690 million is an important step toward building its global specialty insurance business, thereby strengthening its U.S. presence. Western World will also complement Validus’ short-tail operations in Bermuda and London. This acquisition is expected to be accretive in the fourth quarter.
Validus has consistently enhanced shareholders’ value through dividend payments and share buybacks. In the last reported quarter, the company repurchased 2.3 million shares worth $89.2 million taking the year to date tally to 66.2 million shares repurchased for $2.1 billion. Earlier this year the company's board of directors increased its share repurchase authorization to $500 million. As of Sep 30, 2014 Validus had $0.26 million remaining under its authorized share repurchase program. The company’s continuous efforts to reduce the outstanding share count will bolster its earnings going forward.
With respect to dividends, income seeking investors will find Validus an attractive pick as it pays stable and secure dividend. Currently its dividend yield of 2.85% betters the sector average of 1.93%.
With respect to earnings performance, in the third quarter, although higher expenses undermined Validus’ underwriting income and the bottom line, premiums and investment income were stable, indicating steady fundamentals.
Stocks to Consider
Better-ranked stocks worth considering are AmTrust Financial Services, Inc. (AFSI), Arch Capital Group Ltd. (ACGL) and Navigators Group Inc. (NAVG). All these stocks sport a Zacks Rank #1 (Strong Buy).
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