Quick Update for Axis Capital (AXS) Investors

Now trading at a price of $53.82, Axis Capital has moved 0.9% Friday on the heels of its third quarter investor presentation. The company reported a 5% increase in net income, reaching $150 million compared to the previous year. Axis Capital's gross premiums written also saw a 7% uptick, totaling $1.3 billion for the quarter.

CEO Albert Benchimol expressed optimism about the results, stating, "We're very pleased to report strong third quarter results, reflecting the disciplined underwriting and robust risk management that are fundamental to our business."

Over the last year, Axis Capital logged a -1.0% change, with its stock price reaching a high of $63.99 and a low of $51.25. Over the same period, the stock underperformed the S&P 500 index by -13.0%. As of April 2023, the company's 50-day average price was $56.22. AXIS Capital Holdings Limited, through its subsidiaries, provides various specialty insurance and reinsurance products worldwide. Based in Pembroke, Bermuda, the mid-cap Finance company has 2,064 full time employees. Axis Capital has offered a 3.3% dividend yield over the last 12 months.

Exceptional EPS Growth at the Expense of a Highly Leveraged Balance Sheet:

2018 2019 2020 2021 2022 2023
Revenue (MM) $5,090 $5,173 $4,842 $5,322 $5,135 $5,404
Interest Income (MM) $67 $68 $75 $62 $63 $66
Operating Margins 0.0% 7.0% -3.0% 13.0% 5.0% 8.0%
Net Margins 1.0% 6.0% -2.0% 12.0% 4.0% 7.0%
Net Income (MM) $43 $323 -$120 $619 $223 $370
Depreciation & Amort. (MM) $14 $75 $66 $67 $68 $68
Earnings Per Share $0.0 $3.34 -$1.79 $6.9 $2.25 $3.96
Diluted Shares (MM) 84 84 84 85 86 86
Free Cash Flow (MM) -$14 $136 $299 $1,076 $655 $743
Capital Expenditures (MM) $25 $63 $45 $39 $37 $37
Net Current Assets (MM) -$5,903 -$5,700 -$6,237 -$6,723 -$8,362 -$9,378
Long Term Debt (MM) $19,030 $19,979 $20,549 $21,922 $22,944 $24,270

Axis Capital has exceptional EPS growth, weak revenue growth and increasing reinvestment in the business, and generally positive cash flows. However, the firm suffers from weak operating margins with a positive growth rate and a highly leveraged balance sheet.

Axis Capital Has Attractive Multiples and Trades Below Its Graham Number:

Axis Capital has a trailing twelve month P/E ratio of 9.0, compared to an average of 14.34 for the Finance sector. Based on its EPS guidance of $9.26, the company has a forward P/E ratio of 6.1. The company doesn't issue forward earnings guidance, and the compound average growth rate of its last 6 years of reported EPS is inf%. On this basis, the company's PEG ratio is 0.0, which implies that its shares are underpriced. In contrast, the market is likely undervaluing Axis Capital in terms of its equity because its P/B ratio is 1.02 while the sector average is 1.57. The company's shares are currently trading -25.8% below their Graham number.

Axis Capital Has an Average Rating of Hold:

The 7 analysts following Axis Capital have set target prices ranging from $51.0 to $77.0 per share, for an average of $64.86 with a hold rating. As of April 2023, the company is trading -13.3% away from its average target price, indicating that there is an analyst consensus of some upside potential.

Axis Capital has a very low short interest because 1.3% of the company's shares are sold short. Institutions own 93.7% of the company's shares, and the insider ownership rate stands at 1.12%, suggesting a small amount of insider investors. The largest shareholder is Vanguard Group Inc, whose 10% stake in the company is worth $453,422,302.

The above analysis is intended for educational purposes only and was performed on the basis of publicly available data. It is not to be construed as a recommendation to buy or sell any security. Any buy, sell, or other recommendations mentioned in the article are direct quotations of consensus recommendations from the analysts covering the stock, and do not represent the opinions of Market Inference or its writers. Past performance, accounting data, and inferences about market position and corporate valuation are not reliable indicators of future price movements. Market Inference does not provide financial advice. Investors should conduct their own review and analysis of any company of interest before making an investment decision.