Reasons Why Investors Should Consider Buying RLI Stock Now

Zacks Equity Research

9 July 2024 at 8:47 am·4-min read

RLI Corp.’s RLI strong product portfolio, rate increases, improved retention, higher premium receipts and sufficient liquidity make it worth adding to one’s portfolio.

Optimistic Growth Projections

The Zacks Consensus Estimate for RLI’s 2024 earnings per share indicates an increase of 18.4% from the year-ago reported number. The consensus estimate for revenues is pegged at $1.64 billion, implying a year-over-year improvement of 15.6%.

The consensus estimate for 2025 earnings per share and revenues indicates an increase of 3.8% and 9.2%, respectively, from the corresponding 2024 estimates.

Earnings have grown 18.7% in the past five years, better than the industry average of 10.5%

Earnings Surprise History

RLI has a solid track record of beating earnings estimates in three of the last four quarters while missing in one, the average being 132.39%.

Estimate Revision

The Zacks Consensus Estimate for 2024 and 2025 earnings has moved 1.9% and 2.7% north, respectively, in the past 60 days. This should instill investors' confidence in the stock.

Zacks Rank & Price Performance

RLI currently carries a Zacks Rank #2 (Buy). Year to date, the stock has gained 4.3% compared with the industry’s growth of 13.5%.

Image Source: Zacks Investment Research

Business Tailwinds

Product diversification across the Casualty, Property and Surety segments of the company has fueled the insurer’s growth and financial success. The Casualty segment continues to gain from an expanded distribution base in personal umbrella and rate increases.

The commercial property business has been gaining from higher wind and earthquake exposure rates. Rate increases, improved retention and new opportunities in the inland marine space should benefit marine products.

The Surety segment continues to benefit from its compelling product portfolio, growth within existing accounts and writing of bonds with new customers. Building materials inflation and new accounts will aid commercial and contract surety businesses in the future. RLI boasts solid operating results and its financial position remained strong. Operating cash flows are likely to gain from higher premium receipts.

The insurer has a sound capital structure, helping it meet the interests of its policyholders, enhance operations in the insurance sector and aid growth in its book value for the long term. The insurer’s trailing 12-month return on equity of 17.2% outperforms the industry average of 7.8%. Such a robust capital position provides significant financial flexibility to the operating subsidiaries.

RLI has been paying dividends for 187 consecutive quarters and increased regular dividends in each of the last 48 years at an eight-year (2016-2023) CAGR of 3.9%. In addition, the insurer has been paying special dividends since 2011. Over the past five years, the insurer has returned $816 million to shareholders. RLI has $87.5 million of remaining capacity from the repurchase program.

Other Stocks to Consider

Some other top-ranked stocks from the property and casualty insurance industry are Palomar Holdings, Inc. PLMR, ProAssurance Corporation PRA and NMI Holdings Inc NMIH. While Palomar Holdings and ProAssurance sport a Zacks Rank #1 (Strong Buy) each, NMI Holdings currently carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Palomar Holdings earnings surpassed estimates in each of the last four quarters, the average surprise being 15.10%. Year to date, shares of PLMR have jumped 49.4%. The Zacks Consensus Estimate for PLMR’s 2024 and 2025 revenues implies year-over-year growth of 26% and 18.1%, respectively.

The Zacks Consensus Estimate for ProAssurance’s 2024 and 2025 earnings has moved 46.1% and 24.5% north, respectively, in the past 60 days. Year to date, shares of PRA have jumped 4.3%. The Zacks Consensus Estimate for PRA’s 2024 and 2025 revenues implies year-over-year growth of 371.43% and 72.63%, respectively.

NMI Holdings’ earnings surpassed estimates in each of the last four quarters, the average surprise being 8.60%. Year to date, shares of NMIH have jumped 14.1%. The Zacks Consensus Estimate for NMIH’s 2024 and 2025 revenues implies year-over-year growth of 10.6% and 7.6%, respectively.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

RLI Corp. (RLI) : Free Stock Analysis Report

ProAssurance Corporation (PRA) : Free Stock Analysis Report

NMI Holdings Inc (NMIH) : Free Stock Analysis Report

Palomar Holdings, Inc. (PLMR) : Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research

Barrons.com
Why Berkshire’s $1.5 Billion Sale of Bank of America Stock Could Be Just the Beginning
Berkshire Hathaway trimmed its holdings of Bank of America stock for the first time in at least four years. U.S. Bancorp, Wells Fargo, Bank of New York Mellon, and HP Inc. were once large positions at Berkshire and have been eliminated. The risk of further sales appears to be depressing Bank of America stock, which was off 1.5% on Monday afternoon.
The Smart Investor
3 Singapore Blue-Chip Stocks That Could Potentially Raise Their Dividends
Here are three blue-chip stocks that are on the way to raising their dividends. The post 3 Singapore Blue-Chip Stocks That Could Potentially Raise Their Dividends appeared first on The Smart Investor.
Simply Wall St.
At S$1.15, Is It Time To Put UMS Holdings Limited (SGX:558) On Your Watch List?
UMS Holdings Limited ( SGX:558 ), is not the largest company out there, but it saw significant share price movement...
Simply Wall St.
Three SGX Stocks Estimated To Be Undervalued In July 2024
Amidst a landscape of regulatory challenges and fines in the financial sector, as exemplified by Green Dot's recent $44 million penalty from the Federal Reserve, investors may find it prudent to look for value in other areas of the market. In this context, identifying stocks that appear undervalued could provide opportunities for those looking to invest under current market conditions.
Barrons.com
Buffett’s Berkshire Sells Bank of America Stock Worth $1.5 Billion
Berkshire has reduced or eliminated stakes in several banks in recent years, including Wells Fargo, JPMorgan Chase, and Goldman Sachs .
The Smart Investor
3 Companies Joined the US$100 Billion Club for the First Time: Are They Attractive Buys?
We will look at some companies that have attained a market capitalisation of US$100 billion for the first time. The post 3 Companies Joined the US$100 Billion Club for the First Time: Are They Attractive Buys? appeared first on The Smart Investor.
Reuters
Exclusive: Nvidia preparing version of new flagship AI chip for Chinese market, sources say
SINGAPORE (Reuters) -Nvidia is working on a version of its new flagship AI chips for the China market that would be compatible with current U.S. export controls, four sources familiar with the matter said. The AI chip giant in March unveiled its "Blackwell" chip series, which is due to be mass-produced later in the year. Nvidia will work with Inspur, one of its major distributor partners in China, on the launch and distribution of the chip which is tentatively named the "B20", two of the sources said.
The Independent
13 celebrities who lost their fortunes: ‘I had zero money’
Francis Ford Coppola and 50 Cent feature on this list of surprising stars who have suffered significant financial difficulties over the years
Barrons.com
Stock Futures Climb After Biden Quits Campaign. Here’s What to Watch Next.
U.S. stocks are poised for a higher open on Monday, offering the first glimpse of the markets’ reaction to President Joe Biden’s decision not to seek reelection and endorsement of Vice President Kamala Harris to become the Democratic presidential candidate. At 6:30 p.m. Eastern Time on Sunday, Dow Jones Industrial Average futures had gained 40 points, or 0.1%, S&P 500 futures had risen 0.2%, and Nasdaq Composite futures had advanced 0.3%. Polls had shown Donald Trump’s lead over Biden widening since the president’s poor debate, the failed assassination attempt on former President Trump, and the Republican convention.
Insider Monkey
Alibaba Group Holding Limited (BABA): The Best Undervalued Stock According to Reddit?
We recently compiled a list of the 10 Best Undervalued Stocks to Buy According to Reddit. In this article, we are going to take a look at where Alibaba Group Holding Limited (NYSE:BABA) stands against the other undervalued stocks. If interested, read our recent piece on the 10 Most Undervalued Stocks to Buy for Under […]
Zacks
Palantir Technologies Inc. (PLTR) Stock Sinks As Market Gains: What You Should Know
Palantir Technologies Inc. (PLTR) closed the most recent trading day at $28.46, moving -0.42% from the previous trading session.
Reuters
Oil drops as investors look past Biden exit, focus on weak fundamentals
NEW YORK (Reuters) -Oil prices fell for a second consecutive session on Monday to their lowest level in over a month, as investors looked past U.S. President Joe Biden's decision to end his reelection bid and focused on rising stockpiles and signs of weak demand. Biden ended his campaign on Sunday and endorsed Vice President Kamala Harris as the Democrat who should face Republican Donald Trump in the November election. Traders took Biden's decision in stride while shrugging off escalating tensions in the Middle East, U.S. fuel distributor TACenergy's trading desk wrote on Monday.
Reuters
Yen rises as traders look to BOJ, while dollar holds steady
LONDON/SINGAPORE (Reuters) -The yen rose on Tuesday as investors reacted to comments from a senior Japanese politician that added to the pressure on the Bank of Japan to keep hiking rates to boost the currency. The dollar and euro held broadly steady as traders took a breather in a week with little economic data, while the Australian and New Zealand dollars suffered after China's surprise interest rate cut. The dollar was last down 0.65% against the Japanese yen at 155.98, not far from Thursday's five-week low of 155.375.
Reuters
Analysis-China faces growing scepticism over its commitment to decade-old policy pledges
As imbalances in China's economy deepen, pressure is growing on Beijing to deliver on the decade-old policy promises it revived at an agenda-setting leadership meeting last week, having failed to achieve major breakthroughs in recent years. Faced with deflationary pressures and weak demand at home and increased hostility towards its export dominance abroad, the twice a decade political event, known as a plenum, chose to point towards policy continuity rather than any structural shifts. The plenum "has clearly not been a game changer in terms of the reforms announced, especially given the challenges ahead both externally and domestically," said Alicia Garcia Herrero, chief Asia Pacific economist at Natixis.
Reuters
Alphabet to report double-digit Q2 growth; AI adoption, ballooning costs in focus
Google-parent Alphabet is expected to report a nearly 14% rise in quarterly revenue, its fourth straight quarter of double-digit growth, driven by steady demand for its artificial intelligence-powered cloud computing services and an uptick in the ad market. At a developer conference in May, Google widely rolled out AI-powered summaries in Search and beefed up its Gemini AI model to better compete with services from OpenAI and Microsoft. Google is also launching new Pixel devices with AI capabilities next month, moving forward its unveiling event, typically set in fall, after Apple announced in June a slew of AI capabilities and an integration with ChatGPT in the latest iPhones.
South China Morning Post
US likely to cut rates 3 times this year as inflation cools, says former Fed vice-chair
The Federal Reserve is likely to cut interest rates three times this year as inflation heads downward and the labour market cools, according to Richard Clarida, who was vice-chair of the US central bank from 2018 to 2022. Any further improvements in inflation data and increases in the unemployment rate in the US will inform the Fed's decision, Clarida, currently the global economic adviser for asset management giant Pimco, said in an interview in Hong Kong. Pimco's forecast is for two rate cuts,
GOBankingRates
6 Frugal Living Tips Retirees Should Avoid
Wise retirees seek out financial advice in their quest to spread their dollars as far as possible. Some of the suggestions they get are good. Others, not so much. "Retirees often encounter various...
GOBankingRates
I’m a Financial Advisor: 4 Moves I’ll Make If I Think Trump Will Win the Election
Another presidential election is on the horizon, and financial advisors are considering the possibility of Donald Trump securing the Republican nomination and winning a second term at the presidency....
Associated Press Finance
South Korean tech giant Kakao's founder arrested in stock price manipulation case
South Korean prosecutors said Tuesday they have arrested the founder of technology giant Kakao Corp. for alleged stock price rigging during his company’s takeover of a major K-pop agency last year. Kim’s arrest came after the Seoul Southern District Court approved an arrest warrant, citing concerns that he could flee or destroy evidence. Kim faces allegations that he orchestrated and approved schemes to collaborate with the operator of a private equity fund to manipulate the stock price of K-pop agency SM Entertainment to prevent Hybe Corp., the parent company of another K-pop powerhouse behind global sensation BTS, from buying SM Entertainment, according to the prosecutor.
Simply Wall St.
July 2024 Insight Into Three SGX Stocks Estimated As Undervalued
As the global financial landscape evolves, the Singapore market remains a focal point for investors seeking stability and growth opportunities. Recent developments, such as the expansion of innovative payment solutions in Europe by companies like Stables, highlight an increasing integration of traditional finance with digital assets, setting a progressive tone for markets worldwide. In this context, identifying undervalued stocks becomes crucial as they may offer potential for significant...

Straits Times Index

Nikkei

Hang Seng

FTSE 100

Bitcoin USD

CMC Crypto 200

S&P 500

Dow

Nasdaq

Gold

Crude Oil

10-Yr Bond

FTSE Bursa Malaysia

Jakarta Composite Index

PSE Index