Oppenheimer starts RLI Corp. on the play rate, citing industry background via Investing.com
On Wednesday, Oppenheimer began spreading the word RLI CORP . (NYSE:) shares a rating of Perform. The company's analysis highlights RLI Corp.'s strong track record. efficiency and margin performance. However, it also points to a less enthusiastic industry outlook, reduced pricing and growth opportunities, and complex savings dynamics as factors in the rating decision.
The company's shares are seen as fair value in the range of $150 to $175, which translates to a multiple of 25.5 to 29.8 times Oppenheimer's projected 2025 earnings per share (EPS). This valuation compares to RLI's current multiple of 26.8 times and the 10-year historical average of 29.0 times.
Oppenheimer's EPS estimates for RLI Corp. for the years 2025 and 2026 are about 5% below consensus. This conservative rating is due to expected lower margins and a slower growth trend in the Real Estate sector, which is a key area of business for RLI Corp.
The Perform rating suggests that Oppenheimer's view on RLI Corp. is neutral, indicating that the stock is expected to perform in line with the broader market or sector averages. The company's position reflects a balanced view of the company's historical performance compared to the current challenges the industry is facing.
In other recent news, RLI Corp. reported strong financial performance with 11% growth in premiums and a combined ratio of 81.5, reflecting strong underwriting profitability. The company experienced significant growth in its Property, Assurance, and Casualty divisions, with the Property segment growing 6% due to the efforts of Ocean and Hawaii Homeowners, and the Assurance segment increasing 17% driven by Contract Assurance and renewable energy.
RLI Corp. It also announced a tax catastrophe loss of approximately $35 to $40 million due to hurricanes Beryl and Helene, which is expected to impact financial results for the third quarter of 2024.
In an analysis by Wolfe Research and RBC Capital, RLI Corp. Wolfe Research began coverage on RLI Corp. with the Outperform rating, it emphasizes the company's unique underwriting and cost-savings approach as key drivers of continued outperforming. RBC Capital maintained its Sector Perform rating on RLI Corp, noting the company's strong results and favorable underwriting.
Firms also noted RLI Corp.'s strategic moves, such as expanding into market areas such as transportation and storage to combat competition from conventional trucks. They saw RLI Corp's structured portfolio. of underwriting and diversification as key factors in its consistent financial results. These recent developments show the strength of RLI Corp. which continues to grow and become profitable.
InvestingPro Insights
The financial health of RLI Corp. and market conditions give more context to Oppenheimer's neutral stance. According to InvestingPro data, RLI boasts a market capitalization of $7.33 billion and a P/E ratio of 21.77, which closely matches the Oppenheimer valuation range. The company's revenue for the last twelve months from Q2 2024 stands at $1.63 billion, with a remarkable operating margin of 25.68%.
InvestingPro Tips highlights RLI's strong track record for equities, which has maintained payouts for 49 consecutive years. This agreement emphasizes the financial stability of the company, which may provide some assurance against the industry storms noted by Oppenheimer. Additionally, RLI is trading near its 52-week high, priced at 98.48% of its high, which raises investor confidence despite the challenges ahead.
The company's high profits over the past decade and strong five-year performance, as revealed by InvestingPro Tips, lend credence to Oppenheimer's approval of RLI's straightforward execution. However, a high price/book multiple of 4.63 may indicate that the stock is overpriced, possibly supporting Oppenheimer's view of fair valuation.
For investors looking for a deeper understanding of RLI's prospects, InvestingPro offers 5 additional tips that can provide valuable insights into the company's future performance and market conditions.
This article was created with the support of AI and reviewed by an editor. For more information see our T&C.
