Have you been paying attention to shares of Kinsale Capital Group, Inc. (KNSL)? Shares have been on the move with the stock up 10.7% over the past month. The stock hit a new 52-week high of $360.95 in the previous session. Kinsale Capital Group, Inc. has gained 36% since the start of the year compared to the 5.2% move for the Zacks Finance sector and the 5.3% return for the Zacks Insurance – Property and Casualty industry.
What’s Driving the Outperformance?
The stock has an impressive record of positive earnings surprises, as it hasn’t missed our earnings consensus estimate in any of the last four quarters. In its last earnings report on April 27, 2023, Kinsale Capital Group, Inc. reported EPS of $2.44 versus consensus estimate of $2.24.
For the current fiscal year, Kinsale Capital Group, Inc. is expected to post earnings of $10.37 per share on $1.13 billion in revenues. This represents a 32.95% change in EPS on a 37.61% change in revenues. For the next fiscal year, the company is expected to earn $12.41 per share on $1.37 billion in revenues. This represents a year-over-year change of 19.67% and 21.76%, respectively.
Kinsale Capital Group, Inc. may be at a 52-week high right now, but what might the future hold for the stock? A key aspect of this question is taking a look at valuation metrics in order to determine if the company is due for a pullback from this level.
On this front, we can look at the Zacks Style Scores, as they provide investors with an additional way to sort through stocks (beyond looking at the Zacks Rank of a security). These styles are represented by grades running from A to F in the categories of Value, Growth, and Momentum, while there is a combined VGM Score as well. The idea behind the style scores is to help investors pick the most appropriate Zacks Rank stocks based on their individual investment style.
Kinsale Capital Group, Inc. has a Value Score of D. The stock’s Growth and Momentum Scores are A and B, respectively, giving the company a VGM Score of B.
In terms of its value breakdown, the stock currently trades at 34.3X current fiscal year EPS estimates, which is a premium to the peer industry average of 14.8X. On a trailing cash flow basis, the stock currently trades at 44.8X versus its peer group’s average of 16X. This isn’t enough to put the company in the top echelon of all stocks we cover from a value perspective.
We also need to look at the Zacks Rank for the stock, as this supersedes any trend on the style score front. Fortunately, Kinsale Capital Group, Inc. currently has a Zacks Rank of #2 (Buy) thanks to favorable earnings estimate revisions from covering analysts.
Since we recommend that investors select stocks carrying Zacks Rank of 1 (Strong Buy) or 2 (Buy) and Style Scores of A or B, it looks as if Kinsale Capital Group, Inc. meets the list of requirements. Thus, it seems as though Kinsale Capital Group, Inc. shares could have a bit more room to run in the near term.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.