Everest Re (RE) Down 17.6% Since Last Earnings Report: Can It Rebound?

It has been about a month since the last earnings report for Everest Re (RE). Shares have lost about 17.6% in that time frame, underperforming the S&P 500.

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

Everest Re Q4 Earnings Beat Estimates, Improve Y/Y

Everest Re Group, Ltd. delivered fourth-quarter 2019 operating net income per share of $3.20, beating the Zacks Consensus Estimate by 35%. The bottom line came in against the year-ago loss of $5.89 per share.

Both its reinsurance and insurance businesses witnessed growth in the reported quarter.

Operational Update

Everest Re’s total operating revenues of $2.1 billion increased 8.3% year over year. Also, the top line beat the Zacks Consensus Estimate by 0.4%.

Gross written premiums improved 7% year over year to $2.4 billion. The company’s worldwide reinsurance premiums increased 4% year over year. Direct insurance premiums surged 30% to $758.7 million.

Net investment income came in at $146.1 million in the quarter under review, up 4.2% year over year.

Total claims and expenses declined 20.1% to $1.9 billion, mainly on the back of lower incurred losses and loss adjustment expenses, and interest, fees and bond issue cost amortization expense.

Combined ratio contracted 3260 basis points to 101.5%.

Financial Update

Everest Re exited the quarter with total investments and cash worth $20.7 billion, up 12.6% from the 2018-end level. Shareholder equity at the end of the reported quarter increased 16.2% from the figure at 2018 end to $9.1 billion.

Annualized net income return on equity was 12% in 2019.

Everest Re’s cash flow from operations was $1.9 billion in 2019, up from the recorded 2018-level of $610.1 million.

The company bought back shares worth $24.6 million in 2019. The company still has 1.3 million shares remaining under its authorization.

Full-Year Update

For the full year, gross written premiums were $9.1 billion, up 8% year over year. For 2019, Everest Re delivered operating income of $21.34 per share, skyrocketing 358.9% year over year.

How Have Estimates Been Moving Since Then?

It turns out, estimates review have trended upward during the past month. The consensus estimate has shifted 5.04% due to these changes.

VGM Scores

At this time, Everest Re has an average Growth Score of C, however its Momentum Score is doing a lot better with an A. However, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.

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

Outlook

Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Everest Re has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.