RenaissanceRe (RNR) shares soared 3.6% in the last trading session to close at $136.78. The move was backed by solid volume with far more shares changing hands than in a normal session. This compares to the stock's 1.1% loss over the past four weeks.
Increased optimism over the continuous rise in 10-year Treasury yield, as the Fed raised interest rate by 75 basis points and hinted at pursuing more rate hikes in the days ahead, might have driven the stock higher. With a significant amount of U.S. treasuries ($6 billion as of Jun 30, 2022) contained within RenaissanceRe’s fixed maturity investments trading portfolio, a rise in treasury yields is likely to boost the company's net investment income.
This insurance company is expected to post quarterly earnings of $1.30 per share in its upcoming report, which represents a year-over-year change of +114.5%. Revenues are expected to be $1.64 billion, up 3.6% from the year-ago quarter.
Earnings and revenue growth expectations certainly give a good sense of the potential strength in a stock, but empirical research shows that trends in earnings estimate revisions are strongly correlated with near-term stock price movements.
For RenaissanceRe, the consensus EPS estimate for the quarter has remained unchanged over the last 30 days. And a stock's price usually doesn't keep moving higher in the absence of any trend in earnings estimate revisions. So, make sure to keep an eye on RNR going forward to see if this recent jump can turn into more strength down the road.
The stock currently carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>
RenaissanceRe is a member of the Zacks Insurance - Property and Casualty industry. One other stock in the same industry, American Financial Group (AFG), finished the last trading session 1.3% higher at $121.65. AFG has returned -8.3% over the past month.
For American Financial , the consensus EPS estimate for the upcoming report has remained unchanged over the past month at $2.16. This represents a change of -20.3% from what the company reported a year ago. American Financial currently has a Zacks Rank of #1 (Strong Buy).
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