Alleghany Corporation Y is well-poised for growth on higher rates, business opportunities and sturdy financial position.
The company is well poised for progress as is evident from its favorable VGM Score of A. Here V stands for Value, G for Growth and M for Momentum, with the score being a weighted combination of all three factors.
Moreover, it has an impressive Value Score of B. Our research shows that stocks with a Value Score of A or B when combined with a Zacks Rank #1 (Strong Buy) or 2 (Buy) offer the best opportunities in the value investing space.
Alleghany remains well poised for growth on the back of solid operations at Insurance and Reinsurance. Continued strong underwriting performances by TransRe and RSUI Group, Inc. (RSUI), CapSpecialty and PacificComp should continue to benefit the net premiums of the company.
Higher rates, improved general market conditions and growth in most lines of business due to increases in business opportunities are likely to drive premium growth at RSUI in the near term.
The company boasts a solid balance sheet with high liquidity and improving leverage. Its debt to capital of 19.6% betters the industry average of 20.6%. In addition, it continued to maintain a cash and cash equivalent position of $791.4 million. Also, it has access to unsecured revolving credit facility $300 million, which is scheduled to expire on Jul 31, 2022.
The insurer is committed toward enhancing shareholders’ value banking on its robust capital position. At present, Alleghany has $432.4 million remaining in aggregate under its share repurchase authorization.
The stock is currently undervalued. Price to book of 1.04X is lower than the industry average of 1.23X.
The company delivered an earnings surprise in three of the last four reported quarters with the average beat being 88.46%.
However, shares of this Zacks Rank #2 (Buy) property and casualty insurer have rallied 22.7% in the past year, underperforming the industry’s 39.8% growth.
Nevertheless, the Zacks Consensus Estimate for 2021 and 2022 earnings per share is pegged at $51 and $62.70, indicating year-over-year increase of nearly 220.9% and 22.9%, respectively.
Other Stocks to Consider
Some other top-ranked stocks in the insurance space include Fidelity National Financial FNF, Cincinnati Financial CINF and First American Financial FAF, each carrying a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Fidelity National’s bottom line surpassed estimates in each of the last four quarters, the average beat being 41.36%.
Cincinnati Financial surpassed earnings estimates in two of the last four quarters, with the average surprise being 4.10%.
First American Financial’s bottom line surpassed estimates in three of the last four quarters and missed in one, the average beat being 15.86%.
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Cincinnati Financial Corporation (CINF) : Free Stock Analysis Report
First American Financial Corporation (FAF) : Free Stock Analysis Report
Fidelity National Financial, Inc. (FNF) : Free Stock Analysis Report
Alleghany Corporation (Y) : Free Stock Analysis Report