Shares of AXIS Capital Holdings AXS have rallied 64.7% year to date, compared with the industry’s increase of 33.4%, the Finance sector’s rise of 23.2% and the Zacks S&P 500 composite’s rise of 25.3%. With a market capitalization of $7.6 billion, the average volume of shares traded in the last three months was 0.5 million.

A compelling and diversified product portfolio, underwriting excellence, digital capabilities and solid capital position continue to drive this specialty and global reinsurer. 

AXS vs Industry, Sector & S&P 500 YTD

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AXS shares are trading well above the 50-day moving average, indicating a bullish trend. It is trading near its 52-week high.

Average Target Price for AXS Suggests an Upside

Based on short-term price targets offered by seven analysts, the Zacks average price target is at $96.57 per share. The average suggests a potential 8.8% upside from Monday’s closing price.

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AXS Witnessing Northbound Estimate Revision

Three of the four analysts covering the stock raised estimates for the current while two raised the same for the next year. The Zacks Consensus Estimate for Axis Capital’s 2024 and 2025 earnings has moved 1.5% and 0.6% north, respectively, in the past 30 days, reflecting analyst optimism.

Factors Acting in Favor of AXS

AXIS Capital aims to be a leading specialty underwriter and thus focuses on growth areas, including wholesale insurance and lower middle markets. Lowering risk exposure while concentrating on accident and health, excess and supply property, casualty, credit and surety, and specialty reinsurance lines bodes well for growth. 

The Insurance segment is poised to benefit from a diversified portfolio of global specialty businesses, leadership positions and growth opportunities across major business lines. Net premiums written (NPW) have been growing and we expect 2026 NPW to increase at a three-year CAGR of 7.1%.

The Reinsurance business should benefit from strong cycle management, focusing on improving the business mix. We expect 2026 NPW to increase at a three-year CAGR of 7.2%.

AXIS Capital stays focused on expanding digital capabilities to create new business growth in desirable smaller accounts. Simplifying operating structure, delivering efficiencies and capitalizing on productivity gains should help it achieve a general and administrative ratio of less than 11% by 2026.

Strategic initiatives have been driving improvement in its operating earnings over the past few years. 

Optimistic Growth Projection for AXS

The Zacks Consensus Estimate for 2024 earnings is pegged at $10.89, indicating an increase of 10.6% on 7.4% higher revenues of $6.1 billion. The consensus estimate for 2025 earnings is pegged at $11.65, indicating an increase of 7% on 101% higher revenues of $6.8 billion.  

The expected long-term earnings growth rate is pegged at 27.3%, better than the industry average of 11.2%. We expect 2026 EPS to witness a three-year CAGR of 9.1%.

Axis Capital’s Impressive Dividend History

Axis Capital's dividend track record is impressive. It hiked its dividend for 18 straight years and currently yields 2.3%, way above the industry average of 0.3%. The insurer boasts one of the highest dividend yields among its peers.

AXS’ Return on Capital

AXS’ trailing 12-month return on equity is 19.2%, ahead of the industry average of 7.6%. Return on equity, a profitability measure, reflects how effectively a company is utilizing its shareholders' funds.  

Also, the return on invested capital (ROIC) in the trailing 12 months was 11.6%, better than the industry average of 5.8%. Its ROIC has been increasing over the last few quarters amid capital investment made over the same time frame. This reflects the company’s efficiency in utilizing funds to generate income.

Axis Capital Trading at a Discount to Industry

AXS shares are trading at a price-to-book multiple of 1.4, lower than the industry average of 1.6.

Its pricing at a discount to the industry average gives a better entry point to investors. Also, it has a Value Score of A. 
 

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It is attractively valued compared with RenaissanceRe Holdings Ltd RNR and EverestGroup EG.

Parting Thoughts

This leading specialty insurer and global reinsurer, which aims to lead in specialty risks, has been repositioning its portfolio and strengthening its book of businesses. Focusing on prudently deploying resources while enhancing efficiencies, improving its portfolio mix and underwriting profitability poises Axis Capital for growth. It has a VGM Score of A.

Its impressive dividend history, solid growth projections as well as positive analyst sentiment and attractive valuations make this Zacks Rank #2 (Buy) stock worthy of addition to one's portfolio.
 
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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