Can RLI Corp (RLI) Pull a Surprise This Earnings Season?

RLI Corp. RLI is set to report first-quarter 2015 results on Apr 20 after the market closes. Last quarter, the company posted a positive 18.3% surprise. Let’s see how things are shaping up for this announcement.

Factors Influencing This Past Quarter Results

RLI Corp. is poised to benefit from the favorable rate environment that is supporting better pricing.

Also, underwriting results will be cushioned by a favorable catastrophe environment.

The still soft interest rate environment will continue to challenge improvement in investment income growth, though a larger invested asset base will act as a breather.

Increasing expenses and higher debt levels will weigh on margin expansion. In addition, heightened competition remains a headwind.

Earnings Whispers?

Our proven model does not conclusively show that RLI Corp. is likely to beat earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 for this to happen. That is not the case here as you will see below.

Zacks ESP: RLI Corp. has 0.00% Earnings ESP. This is because both the Most Accurate estimate and the Zacks Consensus Estimate stand at 51 cents.

Zacks Rank: RLI Corp. carries a Zacks Rank #3 (Hold). Though this increases the predictive power, the company’s ESP of 0.00% makes surprise prediction difficult.

We caution against stocks with a Zacks Rank #4 or 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks to Consider

Here are some companies you may want to consider as these have the right combination of elements to post an earnings beat this quarter:

AXIS Capital Holdings Limited AXS Earnings ESP of +13.56% and a Zacks Rank #2 (Buy).

PartnerRe Ltd. PRE, Earnings ESP of +6.10% and a Zacks Rank #2.

Everest Re Group Ltd. RE, Earnings ESP of +6.79% and a Zacks Rank #3.

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