Bleak Near-Term Outlook For Multiline Insurance Industry
Zacks Investment Research | Oct 14, 2019 11:36PM ET
The Zacks Finance sector, currently carries a Zacks Industry Rank #158, which places it in the bottom 38% of more than 250 Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperforms the bottom 50% by a factor of more than 2 to 1.
The industry’s positioning in the bottom 50% of the Zacks-ranked industries is the result of negative earnings outlook for the constituent companies in aggregate. Year to date, the industry’s EPS estimate for the current year has declined nearly 3%.
Before we present a few multiline insurance stocks that you may want to consider for your portfolio, let’s take a look at the industry’s recent stock-market performance and valuation picture.
Industry Lags Sector and S&P 500
The Multiline Insurance industry underperformed both the Zacks S&P 500 composite as well as its sector over the past year. The stocks in this industry have collectively lost 0.2% in the past year compared with the Finance sector and Zacks S&P 500 composite’s increase of 1.5% and 4.8%, respectively.
One-Year Price Performance
Current Valuation
On the basis of trailing 12-month price-to-book (P/B), which is commonly used for valuing insurance stocks, the industry is currently trading at 1.51X compared with the S&P 500’s 4.01X and the sector’s 2.63X.
Over the past five years, the industry has traded as high as 1.98X, as low as 0.88X and at the median of 1.46X.
Price-to-Book (P/B) Ratio (TTM)
Price-to-Book (P/B) Ratio (TTM)
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Bottom Line
Adoption of technology, product development, prudent underwriting practices, competitive pricing and a compelling product portfolio should keep supporting business growth for multiline insurers. Also, a sturdy capital level should support effective capital deployment like investing in growth opportunities and returning capital to shareholders.
Investors may look at the following stocks that carry a Zacks Rank #1 (Strong Buy), #2 (Buy) or #3 (Hold). You can see Zacks Investment Research
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