W. R. Berkley Corporation WRB has been trading below its 50-day simple moving average (SMA), signaling a short-term bearish trend. Its share price, as of Jan. 10, 2025, was $56.70, down 13.4% from its 52-week high of $65.49.

The 50-day SMA is a key indicator for traders and analysts to identify support and resistance levels. It is considered particularly important as this is the first marker of an uptrend or downtrend. 

WRB, one of the nation’s largest commercial lines property casualty insurance providers, has a market capitalization of $21.6 billion. The average volume of shares traded in the last three months was 1.6 million. An impressive growth profile, reserving discipline and prudent capital management policy poise it well for growth.

WRB Price Movement vs. 50-Day Moving Average

Image Source: Zacks Investment Research

WRB Still an Outperformer

Shares of WRB have gained 4.9% in the past six months, outperforming the industry’s 2.1% decrease and the Zacks S&P 500 composite’s gain of 3.8% in the same time frame. 

WRB Vs. Industry and S&P 500 in 6 Months

Image Source: Zacks Investment Research

Based on short-term price targets offered by 15 analysts, the Zacks average price target is $64.27 per share. The average suggests a potential 10.6% upside from Friday’s closing price.

Optimistic Growth Projection on WRB

The Zacks Consensus Estimate for 2025 earnings indicates a year-over-year improvement of 9.6% on 8% higher revenues of $14.6 billion. The expected long-term earnings growth rate is pegged at 13.1%, better than the industry average of 11.2%.

It has a Growth Score of A.

The Zacks Consensus Estimate for 2025 earnings has moved 2 cents north in the past 60 days.

Return on Capital

Return on equity (ROE) for the trailing 12 months was 20.4%, comparing favorably with the industry’s 7.6%. This reflects its efficiency in utilizing shareholders’ funds.  It envisions a long-term target of 15%.

Also, return on invested capital (ROIC) has been increasing over the last few quarters while the company raised its capital investment over the same time frame. This reflects WRB’s efficiency in utilizing funds to generate income. ROIC in the trailing 12 months was 10.3%, better than the industry average of 5.8%.

Factors Favoring WRB Stock

As part of its growth strategy, WRB has been focusing on commercial lines, including excess and surplus lines, admitted lines and specialty personal lines, where it also has a competitive advantage.

WRB’s insurance business, which contributes the lion’s share to net premium written, is poised to grow on the strength of several new startup units in varied business lines, expansion of international business that offers diversification benefits, rate increase, market dislocations and high retention.  

WRB remains focused on expanding selectively in attractive global markets and thus has operations in emerging markets of the United Kingdom, Continental Europe, South America, Canada, Scandinavia, Asia and Australia.

WRB boasts more than 60 straight quarters of favorable reserve development, given its prudent underwriting. An operational excellence supports it to maintain a solid balance sheet with sufficient liquidity and strong cash flows.

WRB Shares Are Expensive

WRB shares are trading at a premium to the Zacks Property and Casualty Insurance industry. Its price-to-book value of 2.56X is higher than the industry average of 1.48X.
 
It has a Value Score of A.

Other insurers, such as Arch Capital Group ACGL, CNA Financial CNA and Cincinnati Financial CINF, are also trading at a premium to the industry.

Parting Thoughts on WRB Stock

The insurer is set to grow on rate increases, reserving discipline, diversification benefits, momentum in international business, investment in alternative assets and consistent cash flow.

Banking on consistent cash flow, W.R. Berkley has been hiking dividends since 2005, as well as paying special dividends apart from buying back shares. Its dividend yield of 0.5% appears attractive compared with the industry average of 0.3%, making it an attractive pick for yield-seeking investors. Its VGM Score of A instills confidence.

Thus, despite the shares trading at a premium, one can add this Zacks Rank #1 (Strong Buy) stock to their portfolio for better returns. You can see the complete list of today’s Zacks #1 Rank stocks here.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

W.R. Berkley Corporation (WRB) : Free Stock Analysis Report

Cincinnati Financial Corporation (CINF) : Free Stock Analysis Report

CNA Financial Corporation (CNA) : Free Stock Analysis Report

Arch Capital Group Ltd. (ACGL) : Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research