Q4 Earnings Preview for RLI (RLI)

in EARNINGS/INVESTING IDEAS by

RLI Corp. (NYSE:RLI) is scheduled to report Q4 earnings results on Wednesday, January 22, 2020. The earnings call with management is scheduled for the day after at 11:00 AM ET.

The company is expected to report earnings of $0.56/share on revenue of $235 million. The consensus earnings per share (EPS) of $0.56/share is based on a poll of 5 analysts and represents a growth of 40.0% over the same quarter last year when the company reported earnings of $0.40/share.

The revenue forecast of $235 million based on a poll of 2 analysts implies a year-over-year (YoY) growth of 36.4%. Last year the company reported $172.3 million in revenue for the quarter.

Expected to report EPS growth of $0.16/share for Q4, 2019
Metric Expected Prior Year YoY Change
Revenue $235.03 $172.27 36.4%
EPS $0.56 $0.40 40.0%

Earnings Call Trends

Historically, management has exceeded analyst expectations 7 out of the last 8 tracked quarters, and missed expectations 1 quarter.

What are your expectations from RLI for earnings this quarter? Let us know in the comments!

Analyst Expected vs. Reported EPS
Quarter Expected Reported Surprise Result
Q3, 2019 $0.50 $0.57 14.0% Beat
Q2, 2019 $0.62 $0.66 6.5% Beat
Q1, 2019 $0.59 $0.71 20.3% Beat
Q4, 2018 $0.28 $0.40 40.4% Beat
Q3, 2018 $0.52 $0.46 -11.5% Missed
Q2, 2018 $0.56 $0.60 7.1% Beat
Q1, 2018 $0.54 $0.60 11.1% Beat
Q4, 2017 $0.48 $0.58 20.8% Beat

In the following table, we summarize the company’s stock price movements after earnings releases. The “Price Day Prior” column shows the closing stock price on the day before the earnings report, and the “Price Next Day” column shows the stock price at the end of the trading day after the earnings report.

After the last earnings report for the period ending September 30, 2019, the stock price reacted by increasing by 5.7%.

Stock Price Performance After Earnings
Report Date Price Day Prior Price Next Day Change % Result
2019-10-16 $91.02 $96.24 5.7% Increase
2019-07-17 $87.74 $90.09 2.7% Increase
2019-04-17 $73.58 $78.30 6.4% Increase
2019-01-23 $68.11 $65.84 -3.3% Decline

Fundamentals And Technical Analysis

RLI is currently trading at $93.75/share, up 0.1% for the day. The company is trading at approximately 93.8% of its 52-week high of $99.93/share. The company’s stock price is down -2.6% since the last earnings report and up 4.3% over the previous week.

The company’s 14 Day Relative Price Index (RSI) of 63.46 suggests the company is trading in technically neutral territory. The RSI is considered overbought when above 70 and oversold when below 30.

NYSE:RLI Stock Price Chart Source: Finbox

The current share price implies a price-to-earnings (P/E) multiple of 35.7x and a forward P/E multiple of 36.5x. RLI’s current share price also implies a price-to-book (P/B) multiple of 4.2x. The following table summarizes some other key fundamental ratios:

Data as of January 21, 2020
Metric Value
Last Fiscal Period FY2019.Q3
Period End Date September 30, 2019
Stock Price (Current) $93.75
P/E Ratio 35.7x
P/E Ratio (Fwd) 36.5x
PEG Ratio 71.1
Total Debt to Capital (%) 4.0%
Levered Free Cash Flow $235.2 million
Enterprise Value / EBITDA 32.3x

Source: Finbox

Company Profile: RLI Corp.

RLI Corp. is a mid-cap stock with a market capitalization of $4.198 billion and a total enterprise value of $4.309 billion. The company operates in the Financial sector and the Insurance industry.

RLI Corp., an insurance holding company, underwrites property and casualty insurance in the United States and internationally.

Its Casualty segment provides commercial and personal coverage products; and general liability products, such as coverage for third-party liability of commercial insureds, including manufacturers, contractors, apartments, and mercantile. This segment also offers coverages for security guards and in the areas of onshore energy-related businesses and environmental liability for underground storage tanks, contractors and asbestos, and environmental remediation specialists; and professional liability coverages focuses on providing errors and omission coverage to small to medium-sized design, technical, computer, and miscellaneous professionals.

The company’s Property segment offers commercial property, cargo, hull, protection and indemnity, marine liability, inland marine, homeowners’ and dwelling fire, and other property insurance products.

Its Surety segment offers small bonds for businesses and individuals; bonds for small to medium-sized contractors; commercial surety bonds for medium-to-large businesses; and commercial surety bonds for the energy, petrochemical, and refining industries. The company also underwrites various reinsurance coverages. The company markets its products through branch offices and independent agents.

RLI Corp. was founded in 1965 and is headquartered in Peoria, Illinois.

Expertise: financial modeling, mergers & acquisitions. Andy is also a founder at finbox.io, where he’s focused on building tools that make it faster and easier for investors to do investment research. Andy’s background is in investment banking where he led the analysis on over 50 board advisory engagements involving mergers and acquisitions, fairness opinions and solvency opinions. Some of his board advisory highlights: - Sears Holdings Corp.’s $620 mm spin-off via rights offering of Sears Outlet, Hometown Stores and Sears Hardware Stores. - Cerberus Capital Management’s $3.3 bn acquisition of SUPERVALU Inc.’s New Albertsons, Inc. assets. Andy can be reached at andy@finbox.io or at +1 (516) 778-6257.

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