EG Stock Trading at a Discount to Industry at 6.44X: Time to Hold?

Core Viewpoint - Everest Group, Ltd. (EG) shares are undervalued compared to the industry average, with a forward price to earnings ratio of 6.44X versus the industry average of 8.92X, indicating potential investment opportunity [1] Financial Performance - Everest Group has a market capitalization of $14.53 billion and an average trading volume of 0.4 million shares over the last three months [2] - The Zacks Consensus Estimate for Everest Group's 2025 earnings per share shows a year-over-year increase of 52.2%, with revenues projected at $17.58 billion, reflecting a 1.7% improvement [3] - Earnings have grown 21.4% over the past five years, surpassing the industry average of 10.1%, with a long-term earnings growth rate expected at 28.2% compared to the industry average of 12.8% [4] Analyst Sentiment - The Zacks Consensus Estimate for 2025 earnings has decreased by 0.6% in the past 30 days, while the estimate for 2026 has increased by 0.3% [5] Stock Performance - Shares of Everest Group have declined by 10.5% over the past year, underperforming the industry, Finance sector, and Zacks S&P 500 composite, which grew by 9.1%, 18.1%, and 8.8% respectively [6] Growth Drivers - Key growth drivers for Everest Group include global presence, product diversification, rate increases, and high retention rates, particularly in the Insurance segment [11] - The Reinsurance segment is expected to benefit from ongoing disruptions and evolution in the reinsurance market [11] - Net investment income is anticipated to improve due to higher income from fixed income portfolios and an improved interest rate environment [12] Capital Management - Everest Group maintains a strong capital position with a target long-term debt leverage ratio of 15-20% over three years, reflecting robust earnings capacity [8][13] - The company plans to continue share repurchases through 2025 and has approved a 14.3% increase in its quarterly dividend [14][16] Valuation and Target Price - The average price target from 12 analysts for Everest Group is $391.75 per share, indicating a potential upside of 16.1% from the last closing price [9] Conclusion - The combination of higher income from investments, product diversification, strong renewal retention, and prudent capital deployment positions Everest Group as a strong investment candidate [17]