Have you been paying attention to shares of Kinsale Capital Group, Inc. (KNSL)? Shares have been on the move with the stock up 10.9% over the past month. The stock hit a new 52-week high of $254.91 in the previous session. Kinsale Capital Group, Inc. has gained 6.9% since the start of the year compared to the -11.8% move for the Zacks Finance sector and the -2.5% return for the Zacks Insurance - Property and Casualty industry.
What's Driving the Outperformance?
The stock has an impressive record of positive earnings surprises, as it hasn't missed our earnings consensus estimate in any of the last four quarters. In its last earnings report on July 28, 2022, Kinsale Capital Group, Inc. reported EPS of $1.92 versus consensus estimate of $1.68.
For the current fiscal year, Kinsale Capital Group, Inc. is expected to post earnings of $7.23 per share on $801.71 million in revenues. This represents a 25.96% change in EPS on a 25.31% change in revenues. For the next fiscal year, the company is expected to earn $8.42 per share on $1.02 billion in revenues. This represents a year-over-year change of 16.5% and 27.5%, respectively.
Kinsale Capital Group, Inc. may be at a 52-week high right now, but what might the future hold for the stock? A key aspect of this question is taking a look at valuation metrics in order to determine if the company is due for a pullback from this level.
On this front, we can look at the Zacks Style Scores, as these give investors a variety of ways to comb through stocks (beyond looking at the Zacks Rank of a security). These styles are represented by grades running from A to F in the categories of Value, Growth, and Momentum, while there is a combined VGM Score as well. The idea behind the style scores is to help investors pick the most appropriate Zacks Rank stocks based on their individual investment style.
Kinsale Capital Group, Inc. has a Value Score of D. The stock's Growth and Momentum Scores are A and B, respectively, giving the company a VGM Score of B.
In terms of its value breakdown, the stock currently trades at 35.2X current fiscal year EPS estimates, which is a premium to the peer industry average of 11.7X. On a trailing cash flow basis, the stock currently trades at 43.1X versus its peer group's average of 11.2X. This isn't enough to put the company in the top echelon of all stocks we cover from a value perspective.
We also need to look at the Zacks Rank for the stock, as this supersedes any trend on the style score front. Fortunately, Kinsale Capital Group, Inc. currently has a Zacks Rank of #2 (Buy) thanks to favorable earnings estimate revisions from covering analysts.
Since we recommend that investors select stocks carrying Zacks Rank of 1 (Strong Buy) or 2 (Buy) and Style Scores of A or B, it looks as if Kinsale Capital Group, Inc. fits the bill. Thus, it seems as though Kinsale Capital Group, Inc. shares could have potential in the weeks and months to come.
How Does KNSL Stack Up to the Competition?
Shares of KNSL have been soaring, and the company still appears to be a decent choice, but what about the rest of the industry? One industry peer that looks good is Berkshire Hathaway Inc. (BRK.B). BRK.B has a Zacks Rank of # 2 (Buy) and a Value Score of B, a Growth Score of C, and a Momentum Score of B.
Earnings were strong last quarter. Berkshire Hathaway Inc. beat our consensus estimate by 14.80%, and for the current fiscal year, BRK.B is expected to post earnings of $12.28 per share on revenue of $293.25 billion.
Shares of Berkshire Hathaway Inc. have gained 4% over the past month, and currently trade at a forward P/E of 23.79X and a P/CF of 17.09X.
The Insurance - Property and Casualty industry may rank in the bottom 53% of all the industries we have in our universe, but there still looks like there are some nice tailwinds for KNSL and BRK.B, even beyond their own solid fundamental situation.
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