Axis Capital: High-Quality Dividend Growth Stock Trading Below Fair Value

The past year has been a very challenging one for Axis Capital Holdings (AXS). The company has incurred significant losses in recent quarters, due to the impact of Hurricanes Harvey and Irma, as well as two earthquakes in Mexico. As a result, the stock has declined approximately 25% in the past one year.

However, the stock could now be a buying opportunity. Its declining share price has brought Axis down to an attractive valuation. And, it is a strong dividend growth stock.

Axis Capital has a 3.1% dividend yield, and has increased its dividend for 13 years in a row. It is a Dividend Achiever, a group of 261 stocks with 10+ consecutive dividend increases. You can see the entire list of all 261 Dividend Achievers here.

With 2017 in the rear-view mirror, the road ahead should be much smoother for Axis Capital. As a result, we view the recent share price drop, as a potential buying opportunity. Axis Capital has broad appeal for investors interested in buying high-quality dividend stocks on the cheap.

Earnings Overview

Axis Capital Holdings Limited is an insurance holding company. It specializes in property and casualty insurance, as well accident and health insurance. The stock has a market capitalization of $4.2 billion. The company has two operating segments: Insurance and Reinsurance.

AXS Overview

Source: Investor Presentation, page 5

On February 7th, Axis reported fourth-quarter 2017 earnings results.  The company incurred a net loss of $38 million, or $0.46 per share. As expected, the loss was due to catastrophe and weather-related losses, which totaled $133 million net of reinsurance and reinstatement premiums.

On an adjusted basis, which strips out non-recurring factors, earnings-per-share of $0.24 declined significantly from $1.14 in the same quarter a year ago. For 2017, the full-year loss totaled $4.94 per share, which reversed a profit of $5.08 per share in 2016. The company ended 2017 with a diluted book value per share of $53.88, a decrease of 7.5% from year-end 2016.

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Disclosure: Sure Dividend is published as an information service. It includes opinions as to buying, selling and holding various stocks and other securities.

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