Why Is Markel Group (MKL) Up 15.8% Since Last Earnings Report?

It has been about a month since the last earnings report for Markel Group (MKL). Shares have added about 15.8% in that time frame, outperforming the S&P 500.Will the recent positive trend continue leading up to its next earnings release, or is Markel Group due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts. Markel Group Q3 Earnings Miss Estimates, Revenues Increase Y/YMarkel Group reported third-quarter 2024 net operating earnings per share of $17.34, which missed the Zacks Consensus Estimate by 21%. However, the bottom line increased 4.7% year over year.Markel’s third-quarter results reflected improved net investment income, reduced operating expenses and more favorable development on prior accident years loss reserves, offset by lower earned premiums.Quarterly Operational Update  Total operating revenues of $3.7 billion missed the Zacks Consensus Estimate by 1.3%. The top line rose 1.4% year over year on higher product revenues, services and other revenues and higher net investment income.Earned premiums decreased 1% year over year to $2.1 billion in the quarter. The modest decrease was due to lower gross premium volume in the Reinsurance segment. The figure was lower than our estimate of $2.2 billion.Net investment income increased 22% year over year to $233.3 million in the third quarter. The rise was due to higher interest rates and increased investment holdings in 2024. The figure was higher than our estimate of $217.6 million and the Zacks Consensus Estimate of $216 million.Total operating expenses of Markel decreased 1.9% year over year to $3.2 billion, primarily due to lower losses and loss adjustment expenses and amortization of intangible assets. The figure matched our estimate.MKL’s combined ratio improved 270 basis points (bps) year over year to 96.4 in the reported quarter. Excluding losses attributed to natural catastrophes, the decrease in the consolidated combined ratio was primarily attributable to more favorable development on prior accident years loss reserves within the Insurance segment. The figure matched the Zacks Consensus Estimate.Segment UpdateInsurance: Gross premiums increased 2% year over year to $2.4 billion. The uptick was driven by new business growth and more favorable rates within personal lines, programs, marine and energy and credit and surety product lines. It was partially offset by lower premium volume within select lines of U.S. general liability and professional liability product lines. The figure matched our estimate.Underwriting profit came in at $109.5 million, which surged more than four-fold year over year. The combined ratio improved 450 bps year over year to 94.1. It included $61 million of net losses and loss adjustment expenses attributed to Hurricane Helene.Reinsurance: Gross premiums decreased 4% year over year to $121.1 million. The decrease was driven by the impact of unfavorable premium adjustments within credit and surety and general liability product lines in 2024 compared to favorable premium adjustments in 2023. It was partially offset by new business within professional liability product lines. The figure was lower than our estimate of $383.3 million.Underwriting loss was $33.5 million, wider than a loss of $5.8 million reported in the year ago. The combined ratio deteriorated 1,130 bps year over year to 113.4 in the third quarter.Markel Ventures: Operating revenues of $1.2 billion improved 1% year over year. The increase in operating revenues was primarily driven by the impact of higher prices at one of consumer and building products businesses and increased demand at equipment manufacturing businesses, as well as the contribution from Valor, which was acquired in June 2024. The improvements in operating revenues were largely offset by the impact of decreased demand and lower prices across a number of other businesses, most notably at one of transportation-related businesses.Operating income of $106.6 million decreased 18% year over year due to the impact of lower revenues and operating margins across a number of businesses, most notably at one of transportation-related businesses and construction services businesses. The decreases in segment operating income were partially offset by the impact of higher revenues and operating margins at equipment manufacturing businesses and one of consumer and building products businesses.Financial UpdateMarkel exited the third quarter with investments, cash and cash equivalents and restricted cash and cash equivalents of $34.6 billion as of Sept. 30, 2024, up 12% from 2023-end. The debt balance increased 15.2% year over year to $4.3 billion as of Sept. 30, 2024. The debt-to-capital ratio was 20% as of Sept. 30, 2024, which remained unchanged from 2023-end. Shareholders' equity was $17 billion at third-quarter 2024-end, up 13.5% from 2023-end.Net cash provided by operating activities was $2.1 billion in the first nine months of 2024, up 7% year over year.How Have Estimates Been Moving Since Then?It turns out, estimates revision have trended downward during the past month.The consensus estimate has shifted -8.09% due to these changes.VGM ScoresCurrently, Markel Group has a subpar Growth Score of D, though it is lagging a bit on the Momentum Score front with an F. However, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.OutlookEstimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Markel Group has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.Performance of an Industry PlayerMarkel Group belongs to the Zacks Diversified Operations industry. Another stock from the same industry, Carlisle (CSL), has gained 8.4% over the past month. More than a month has passed since the company reported results for the quarter ended September 2024.Carlisle reported revenues of $1.33 billion in the last reported quarter, representing a year-over-year change of +5.9%. EPS of $5.78 for the same period compares with $4.68 a year ago.For the current quarter, Carlisle is expected to post earnings of $4.51 per share, indicating a change of +8.2% from the year-ago quarter. The Zacks Consensus Estimate has changed -2.5% over the last 30 days.Carlisle has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. 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(MKL): Free Stock Analysis Report Carlisle Companies Incorporated (CSL): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks