Everest Group, Ltd. (EG – Free Report) shares are trading at a discount to the Zacks Multi-line Insurance industry. Its forward price-to-book value of 1.01X is lower than the industry average of 2.31X, the Finance sector’s 3.97X and the Zacks S&P 500 composite’s 8.76X. The insurer has an impressive Value Score of A.
Image Source: Zacks Investment Research
The insurer has a market capitalization of $15.45 billion. The average volume of shares traded in the last three months was 0.4 million.
The stock remains attractively valued compared with CNO Financial Group, Inc. (CNO – Free Report) , EverQuote, Inc. (EVER – Free Report) and Assurant, Inc. (AIZ – Free Report) .
Everest Group shares have gained 1.8% in the past year compared with the industry growth of 12.5%.
One Year Price Performance
Image Source: Zacks Investment Research
Negative Analyst Sentiment
Four of the six analysts covering the stock have lowered estimates for 2025 over the past 30 days. The Zacks Consensus Estimate for 2025 earnings has moved 2.2% south in the past 30 days.
EG’s Return on Capital
EG’s trailing 12-month return on equity is 22.4%, ahead of the industry average of 15.3%. Return on equity, a profitability measure, reflects how effectively a company is utilizing its shareholders.
Also, the return on invested capital in the trailing 12 months was 15.6%, better than the industry average of 2.3%. This reflects the company’s efficiency in utilizing funds to generate income.
Key Drivers of Everest Group
Global presence, product diversification, rate increase and high retention rate continue to drive EG’s overall growth. The Insurance segment is poised to benefit from an increase in property and short tail business and a rise in specialty casualty business. On the other hand, leveraging opportunities stemming from the continued disruption and evolution of the reinsurance market should poise the Reinsurance segment for growth.
Net investment income stands to benefit from higher income from the fixed income portfolio, an increase in limited partnership income, a rise in dividend income from the equity portfolio and higher income from other invested assets. An improved interest rate environment adds to the upside.
Everest Group has a strong capital position, banking on sufficient cash generation capabilities and benefits from capital adequacy, financial flexibility, long-term operating performance and traditional risk management capabilities. The multi-line insurer targets a 15-20% long-term debt leverage ratio for three years.
EG’s Capital Deployment
Everest Group is expected to benefit from its capital adequacy, financial flexibility, long-term operating performance and traditional risk management capabilities. In May 2024, its board approved a 14.3% hike in its quarterly dividend. EG paid $86 million in dividends during the third quarter of 2024. Everest Group targets a total shareholder return on equity of more than 17% from 2024 to 2026. It reflects the robust and well-diversified earnings power of Everest. EG expects to make consistent payouts, along with buybacks, given its disciplined capital management strategy and strong capital balance.
Conclusion
Higher income from the fixed income portfolio, product diversification, strong renewal retention, prudent capital deployment and a solid capital position make Everest Group a strong contender for being in one’s portfolio. Favorable estimates and higher return on capital also add to the upside.
The stock currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Financial Market Newsflash
No financial news published today. Check back later.
