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2 Reasons to Watch WRB and 1 to Stay Cautious

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WRB Cover Image

W. R. Berkley trades at $73.39 and has moved in lockstep with the market. Its shares have returned 8.3% over the last six months while the S&P 500 has gained 4.9%.

Is WRB a buy right now? Find out in our full research report, it’s free.

Why Does WRB Stock Spark Debate?

Founded in 1967 and operating through more than 50 specialized insurance units across the globe, W. R. Berkley (NYSE: WRB) underwrites commercial insurance and reinsurance through specialized subsidiaries serving industries from healthcare to construction to transportation.

Two Positive Attributes:

1. Net Premiums Earned Drive Additional Growth Opportunities

When insurers sell policies, they protect themselves from extremely large losses or an outsized accumulation of losses with reinsurance (insurance for insurance companies). Net premiums earned are therefore net of what’s ceded to reinsurers as a risk mitigation and transfer strategy.

W. R. Berkley’s net premiums earned has grown at a 11.3% annualized rate over the last five years, a step above the broader insurance industry and in line with its total revenue.

W. R. Berkley Trailing 12-Month Net Premiums Earned

2. Projected BVPS Growth Is Remarkable

The key to book value per share (BVPS) growth is an insurer’s ability to earn underwriting profits while generating strong returns on its float - Warren Buffet’s secret sauce.

Over the next 12 months, Consensus estimates call for W. R. Berkley’s BVPS to grow by 26.1% to $28.71, elite growth rate.

W. R. Berkley Quarterly Book Value per Share

One Reason to Be Careful:

Projected Revenue Growth Is Slim

Forecasted revenues by Wall Street analysts signal a company’s potential. Predictions may not always be accurate, but accelerating growth typically boosts valuation multiples and stock prices while slowing growth does the opposite.

Over the next 12 months, sell-side analysts expect W. R. Berkley’s revenue to rise by 4.2%, a deceleration versus its 7.8% annualized growth for the past two years. This projection doesn’t excite us and implies its products and services will face some demand challenges. At least the company is tracking well in other measures of financial health.

Final Judgment

W. R. Berkley’s merits more than compensate for its flaws. At $73.39 per share (or 2.7× forward P/B), is now the time to initiate a position? See for yourself in our comprehensive research report, it’s free.

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