Markel Group has been treading water for the past six months, recording a small loss of 4.1% while holding steady at $1,975. The stock also fell short of the S&P 500’s 8.4% gain during that period.
Is now the time to buy Markel Group, or should you be careful about including it in your portfolio? Dive into our full research report to see our analyst team’s opinion, it’s free.
Why Is Markel Group Not Exciting?
We’re cautious about Markel Group. Here are three reasons why MKL doesn’t excite us, plus one stock we’d rather own.
1. Net Premiums Earned Point to Soft Demand
When insurers sell policies, they protect themselves from extremely large losses or an outsized accumulation of losses with reinsurance (insurance for insurance companies). Net premiums earned are therefore net of what’s ceded to reinsurers as a risk mitigation and transfer strategy.
Markel Group’s net premiums earned has grown at a 1.3% annualized rate over the last two years, much worse than the broader insurance industry and slower than its total revenue.
2. Revenue Projections Show Stormy Skies Ahead
Forecasted revenues by Wall Street analysts signal a company’s potential. Predictions may not always be accurate, but accelerating growth typically boosts valuation multiples and stock prices while slowing growth does the opposite.
Over the next 12 months, sell-side analysts expect Markel Group’s revenue to drop by 3.5%, a decrease from its 3.2% annualized growth for the past two years. This projection is underwhelming and implies its products and services will see some demand headwinds.
Final Judgment
Markel Group isn’t a terrible business, but it isn’t one of our picks. With its shares trailing the market in recent months, the stock trades at 1.3× forward P/B (or $1,975 per share). Beauty is in the eye of the beholder, but our analysis shows the upside isn’t great compared to the potential downside. We’re pretty confident there are more exciting stocks to buy at the moment. We’d suggest looking at the Amazon and PayPal of Latin America.
Stocks We Like More Than Markel Group
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