AXIS Capital Q3 Earnings: Is NYSE:AXS Cheap at 0.8x Price/Book?

in EARNINGS/INVESTING IDEAS by

AXIS Capital Holdings Limited (NYSE:AXS) is scheduled to report Q3 earnings results after markets close for trading on October 28, 2020.

The company is expected to report earnings of -$0.93/share on revenue of $901 million. The consensus earnings per share (EPS) of -$0.93/share is based on a poll of 9 analysts and represents a decline in eps of -138.4% over the same quarter last year, when the company reported earnings of -$0.39/share.

The revenue forecast of $901 million based on a poll of 3 analysts implies a year-over-year (YoY) growth in revenue of 5.2%. Last year the company reported $856.1 million in revenue for the quarter.

Expected to report EPS of -$0.93/share for Q3, 2020
Metric Expected Prior Year YoY Change
Revenue $900.96 $856.08 5.2%
EPS -$0.93 -$0.39 138.4%

Earnings Call Trends

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

What are your expectations from AXIS Capital Holdings Limited for earnings this quarter? Let us know in the comments!

Analyst Expected vs. Reported EPS
Quarter Expected Reported Surprise Result
Q2, 2020 $0.36 $0.84 133.1% Beat
Q1, 2020 -$1.56 -$1.94 -24.7% Missed
Q4, 2019 $0.18 $0.05 −72.6% Missed
Q3, 2019 $0.18 -$0.39 −317.4% Missed
Q2, 2019 $1.31 $1.62 23.5% Beat
Q1, 2019 $1.39 $1.24 −11.1% Missed
Q4, 2018 -$1.30 -$1.77 -36.6% Missed
Q3, 2018 $0.76 $0.96 26.7% 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 reacted by increasing 2.2%.

Stock Price Performance After Earnings
Report Date Price Day Prior Price Next Day Change % Result
July 28, 2020 $40.83 $41.71 2.2% Increase
May 4, 2020 $34.93 $35.85 2.6% Increase
January 29, 2020 $62.26 $65.74 5.6% Increase
October 29, 2019 $61.62 $59.20 −3.9% Decline

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 −2.52, the model suggests that the company is not likely to be an earnings manipulator. A value of −2.52 implies a 0.6% chance of earnings manipulation.

Fundamentals And Technical Analysis

AXIS Capital Holdings Limited is currently trading at $46.59/share, down −3.4% for the day. The company is trading at approximately 70.4% of its 52-week high of $66.16/share. The company’s stock price is up 11.7% since the last earnings report and up 3.9% over the previous week. The company’s 14 Day Relative Price Index (RSI) of 54.53 suggests the company is trading in technically neutral territory. The RSI is considered overbought when above 70 and oversold when below 30.


NYSE:AXS Stock Price Chart
Source: Finbox

The current share price implies a price-to-earnings (P/E) multiple of −71.33 and a forward P/E multiple of −53.46.

AXIS Capital Holdings Limited’s current share price also implies a price-to-book (P/B) multiple of 0.83. The following table summarizes some other key fundamental ratios:

Data as of October 26, 2020
Metric Value
Last Reported Fiscal Period Key FY2020.Q2
Period End Date June 30, 2020
Stock Price (Current) $46.59
P/E Ratio −71.3x
P/E Ratio (Fwd) −53.5x
PEG Ratio 0.5
Total Debt / Total Capital 23.9%
Levered Free Cash Flow $321.6 million
EV / EBITDA −72.4x

Finbox

AXIS Capital Holdings Limited is a mid-cap stock with a market capitalization of $3.928 billion and a total enterprise value of $4.842 billion. The company operates in the Financials sector and the Insurance industry.

AXIS Capital Holdings Limited, through its subsidiaries, provides various specialty insurance and reinsurance products worldwide. It operates through two segments, Insurance and Reinsurance. The Insurance segment offers property insurance products for commercial buildings, residential premises, construction projects, and onshore energy installations; marine insurance products covering offshore energy, cargo, liability, recreational marine, fine art, specie, hull, and war; and terrorism, aviation, credit and political risk, and liability insurance products. It also provides professional insurance products that cover directors’ and officers’ liability, errors and omissions liability, employment practices liability, fiduciary liability, crime, professional indemnity, cyber and privacy, medical malpractice, and other financial insurance related coverages for commercial enterprises, financial institutions, not-for-profit organizations, and other professional service providers. In addition, this segment offers accidental death, travel, and specialty health products for employer and affinity groups. The Reinsurance segment offers reinsurance products to insurance companies, including catastrophe reinsurance products; property reinsurance products covering property damage and related losses resulting from natural and man-made perils; professional lines; and credit and surety products. This segment also provides agriculture reinsurance products; coverages for various types of construction risks and risks related to erection, testing, and commissioning of machinery and plants during the construction stage; marine and aviation reinsurance products; and personal accident, specialty health, accidental death, travel, life and disability reinsurance products. The company was founded in 2001 and is headquartered in Pembroke, Bermuda.

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