W. R. Berkley (NYSE:WRB) Q3 2020 Earnings Prep

in EARNINGS/INVESTING IDEAS by

W. R. Berkley Corporation (NYSE:WRB) is scheduled to report Q3 earnings results after markets close for trading on October 20, 2020.

The company is expected to report earnings of $0.70/share on revenue of $1.752 billion. The consensus earnings per share (EPS) of $0.70/share is based on a poll of 9 analysts and represents a decline in eps of −17.3% over the same quarter last year, when the company reported earnings of $0.85/share.

The revenue forecast of $1.752 billion based on a poll of 3 analysts implies a year-over-year (YoY) growth in revenue of 4.5%. Last year the company reported $1.677 billion in revenue for the quarter.

Expected to report EPS contraction of −17.3% for Q3, 2020
Metric Expected Prior Year YoY Change
Revenue $1,752.36 $1,676.81 4.5%
EPS $0.70 $0.85 −17.3%

Earnings Call Trends

Historically, management has exceeded analyst expectations 5 out of the last 8 tracked quarters, and missed expectations 3 quarters.

What are your expectations from W. R. Berkley Corporation for earnings this quarter? Let us know in the comments!

Analyst Expected vs. Reported EPS
Quarter Expected Reported Surprise Result
Q2, 2020 $0.09 $0.06 −36.7% Missed
Q1, 2020 $0.73 $0.69 −5.4% Missed
Q4, 2019 $0.72 $0.71 −0.4% Missed
Q3, 2019 $0.67 $0.85 26.0% Beat
Q2, 2019 $0.64 $0.82 28.0% Beat
Q1, 2019 $0.63 $0.66 4.2% Beat
Q4, 2018 $0.52 $0.63 19.9% Beat
Q3, 2018 $0.55 $0.75 36.6% 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 June 30, 2020, the stock price did not react much to the update.

Stock Price Performance After Earnings
Report Date Price Day Prior Price Next Day Change % Result
July 21, 2020 $63.40 $63.93 0.8% Increase
April 21, 2020 $55.25 $51.28 −7.2% Decline
January 28, 2020 $71.59 $72.75 1.6% Increase
October 22, 2019 $70.91 $71.87 1.4% Increase

The other question to consider is one of earnings manipulation. There is a lot of pressure on management each quarter to deliver on earnings expectations. The Beneish M-Score is a statistical model that provides some insight into whether the company might be manipulating earnings. With a Beneish M-Score of −2.48, the model suggests that the company is not likely to be an earnings manipulator. A value of −2.48 implies a 0.7% chance of earnings manipulation.

Fundamentals And Technical Analysis

W. R. Berkley Corporation is currently trading at $62.92/share, up 1.4% for the day. The company is trading at approximately 78.5% of its 52-week high of $79.92/share. The company’s stock price is down −1.6% since the last earnings report and down −2.3% over the previous week. The company’s 14 Day Relative Price Index (RSI) of 48.47 suggests the company is trading in technically neutral territory. The RSI is considered overbought when above 70 and oversold when below 30.


NYSE:WRB Stock Price Chart
Source: Finbox

The current share price implies a price-to-earnings (P/E) multiple of 31.84 and a forward P/E multiple of 26.02.

W. R. Berkley Corporation’s current share price also implies a price-to-book (P/B) multiple of 1.93. The following table summarizes some other key fundamental ratios:

Data as of October 19, 2020
Metric Value
Last Reported Fiscal Period Key FY2020.Q2
Period End Date June 30, 2020
Stock Price (Current) $62.92
P/E Ratio 31.8x
P/E Ratio (Fwd) 26.0x
PEG Ratio −0.6
Total Debt / Total Capital 22.1%
Levered Free Cash Flow $1.248 billion
EV / EBITDA −4.3x

Finbox

W. R. Berkley Corporation is a large-cap stock with a market capitalization of $11.045 billion and a total enterprise value of $11.803 billion. The company operates in the Financials sector and the Insurance industry.

W. R. Berkley Corporation, an insurance holding company, operates as a commercial lines writer in the United States and internationally. It operates through two segments, Insurance and Reinsurance & Monoline Excess. The Insurance segment underwrites commercial insurance business, including premises operations, commercial automobile, property, products liability, and professional liability lines. It also provides workers’ compensation, property casualty, general liability, professional liability, and excess and umbrella coverage insurance products; accident and health insurance and reinsurance products; insurance for commercial risks; specialty environmental products for contractors, consultants, and property owners; and liquor liability and inland marine coverage for small to medium-sized insureds. In addition, this segment offers directors and officers, and surety risk products, as well as products for life sciences and travel industries; coverage for excess liability, construction wrap-ups, and completed operations; cyber risk solutions; casualty, group life, and crime and fidelity related insurance products; personal lines insurance solutions, including home, condo/co-op, and collectibles; automobile, law enforcement, public officials and educator’s legal, and employment practices liability, as well as incidental medical insurance products; and at-risk and alternative risk insurance program management services. The Reinsurance & Monoline Excess segment provides other insurance companies and self-insureds with assistance in managing their net risk through reinsurance on a portfolio basis through treaty reinsurance or on an individual basis through facultative reinsurance. W. R. Berkley Corporation was founded in 1967 and is headquartered in Greenwich, Connecticut.

Expertise: financial technology, analyzing market trends. Brian is a founder at finbox.io, where he’s focused on building tools that make it faster and easier for investors to research stock fundamentals. Brian’s background is in physics & computer science and previously worked as a software engineer at GE Healthcare. He enjoys applying his expertise in technology to help find market trends that impact investors. Brian can be reached at brian@finbox.io or at +1 (516) 778-6257.

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