Everest Re Group (RE) Up 5.1% Since Earnings Report: Can It Continue?

A month has gone by since the last earnings report for Everest Re Group, Ltd. (NYSE:RE) . Shares have added about 5.1% in that time frame, outperforming the market.

Will the recent positive trend continue leading up to its next earnings release, or is RE due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.

Everest Re Group Beats on Q4 Earnings and Revenues

Everest Re Group, Ltd. reported fourth-quarter 2017 operating earnings of $13.48 per share, having surpassed the Zacks Consensus Estimate by a whopping 157.3%. The bottom line also substantially improved 52.7% from the year-ago quarter.

Despite 2017 being one of the costliest years in terms of catastrophe loss, Everest Re Group delivered exceptional results. Moreover, all the segments contributed to the company’s favorable performance.

Including after-tax net realized capital gains of 56 cents and the impact of the Tax Cuts and Jobs Act of 2017 (TCJA) of 20 cents, net income came in at $13.85 per share, up 52.5% from the prior-year quarter.

Full-Year Highlights

For 2017, Everest Re Group reported operating earnings per share of $9.10, declining 61.5% year over year.

Total operating revenues of $6.4 billion grew 11.5% year over year.

Operational Update

Everest Re Group’s total operating revenues of $1.8 billion increased nearly 16.8% year over year. Moreover, the top line beat the Zacks Consensus Estimate by 2.6%.

Gross written premiums grew 26% year over year to $1.9 billion. The company’s worldwide reinsurance premiums increased 17% while direct insurance premiums improved 15% for the year.

Net investment income came in at $149.1 million in the quarter, up 29.5% year over year.

Total claims and expenses declined 2.2% to $1.2 million, largely on lower incurred losses and loss adjustment expenses, corporate expenses as well as interest, fees and bond issue cost amortization expense.

The quarter suffered a catastrophe loss — net of reinstatement premiums — of $161.5 million from both Northern and Southern California wildfires. Combined ratio improved 1210 basis points (bps) to 70.0% from 82.1% in the year-ago quarter.

Financial Update

Everest Re Group exited the quarter with total assets of $23.6 billion, up about 10.6% from $21.3 billion at the end of 2016. Shareholder equity at the end of the reported quarter increased 3.6% to $8.4 billion from the level of $8 billion at 2016-end.

Total cash balance at the end of the quarter under review increased 31.8% to $635.1 million from $481.9 million at the end of 2016. Everest Re Group’s cash flow from operations was $118.5 million, having plunged nearly 72% year over year.

Book value per share came in at $204.95 as of Dec 31, 2017, up 3.8% from the 2016-end level.

Share Repurchase and Dividend Update

In the fourth quarter, the company bought back 0.2 million shares worth $50 million. Currently, the company has 1.8 million shares left under its share repurchase authorization.

During the fourth quarter, the company paid out a dividend of $1.30 per share, up 4% year over year.

How Have Estimates Been Moving Since Then?

It turns out, fresh estimates flatlined during the past month. There have been two revisions higher for the current quarter compared to two lower.

Everest Re Group, Ltd. Price and Consensus

Everest Re Group, Ltd. Price and Consensus | Everest Re Group, Ltd. Quote

VGM Scores

At this time, RE has an average Growth Score of C, a grade with the same score on the momentum front. Following the exact same course, the stock was also allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.

Based on our scores, the stock is equally suitable for value, growth, and momentum investors.

Outlook

RE has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.