Everest Group Is Trading at a Discount: Time to Load Up or Hold Off?

Core Viewpoint - Everest Group, Ltd. (EG) is trading at a discount compared to the industry, with a price-to-book value of 0.93X versus the industry average of 2.53X, and holds a Value Score of A [1] Group 1: Price Performance - Shares of Everest Group have declined by 7.9% year-to-date, underperforming the Finance sector and the Zacks S&P 500 composite, which grew by 13.6% and 13.4% respectively [3] - The market capitalization of Everest Group is $13.9 billion, with an average trading volume of 0.4 million shares over the last three months [3] Group 2: Financial Projections - The Zacks Consensus Estimate for Everest Group's 2025 revenues is $17.7 billion, reflecting a year-over-year increase of 2.3% [5] - The consensus estimate for current-year earnings is $45.51 per share, indicating a growth of 52.6% from the previous year [5] - Projections for 2026 earnings per share and revenues suggest year-over-year increases of 33.6% and 4.8% respectively [5] Group 3: Business Strategy and Growth - Everest Group is diversifying its products and regions, which supports steady and sustainable growth, while reducing reliance on North America [8][12] - The company is expanding its presence in Asia, Latin America, and Europe, enhancing underwriting agility and risk-adjusted returns [12] - A conservative investment strategy, with over 75% of assets in investment-grade fixed income, positions the company to benefit from a higher-rate environment [14] Group 4: Financial Health - Everest Group's debt-to-capital ratio is 19.3%, significantly lower than the industry average of 34.2%, indicating strong financial flexibility [15] - The times interest earned ratio stands at 447x, compared to the industry average of 11.5x, showcasing a disciplined approach to leverage [15] Group 5: Profitability Metrics - The return on equity for Everest Group is 5.9%, which is below the sector average of 14.8%, highlighting challenges in capital efficiency [17] - The combined ratio for the second quarter increased by 10 basis points year-over-year to 90.4%, indicating ongoing exposure to catastrophic losses [16] Group 6: Shareholder Value - The company has raised dividends four times in the past five years, resulting in an annualized growth rate of 11.7% and a current payout ratio of 40% [18] - A $10 million share repurchase program has been authorized, reflecting a commitment to rewarding investors [18] Conclusion - Overall, Everest Group is supported by product diversification, higher premium volumes, and disciplined financial management, but faces challenges related to catastrophe losses and profitability metrics [19]