NEW YORK (
) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth, solid stock price performance, reasonable valuation levels, good cash flow from operations and growth in earnings per share. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity.
Highlights from the ratings report include:
- MKL's revenue growth has slightly outpaced the industry average of 20.7%. Since the same quarter one year prior, revenues rose by 25.6%. Growth in the company's revenue appears to have helped boost the earnings per share.
- Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period. Although other factors naturally played a role, the company's strong earnings growth was key. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
- Net operating cash flow has significantly increased by 84.89% to $109.55 million when compared to the same quarter last year. In addition, MARKEL CORP has also modestly surpassed the industry average cash flow growth rate of 82.68%.
- MARKEL CORP has improved earnings per share by 46.7% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past year. However, we anticipate underperformance relative to this pattern in the coming year. During the past fiscal year, MARKEL CORP increased its bottom line by earning $27.30 versus $20.52 in the prior year. For the next year, the market is expecting a contraction of 53.8% in earnings ($12.60 versus $27.30).
Markel Corporation markets and underwrites specialty insurance products and programs. It operates in three segments: Excess and Surplus Lines, Specialty Admitted, and London markets. The company has a P/E ratio of 15.7, equal to the average insurance industry P/E ratio and below the S&P 500 P/E ratio of 17.7. Markel has a market cap of $3.8 billion and is part of the
industry. Shares are up 5.8% year to date as of the close of trading on Friday.
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