We came across a bullish thesis on Everest Group, Ltd. (EG) on Value Investing Subreddit Page by Elimun82. In this article, we will summarize the bulls’ thesis on EG. Everest Group, Ltd. (EG)’s share was trading at $338.21 as of Feb 20th. EG’s trailing and forward P/E were 10.58 and 6.46 respectively according to Yahoo Finance.
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Everest Group Ltd (EG) is a leading global reinsurance and insurance provider with a core focus on property and casualty (P&C) reinsurance and specialty insurance. The company supports insurers by providing financial backing against large-scale risks, including natural disasters and major accidents, while also underwriting policies for commercial properties, marine, and specialty risks. With a strong global footprint spanning North America, Latin America, Europe, and Asia, EG benefits from significant scale and underwriting expertise, granting it a durable competitive edge in reinsurance. However, its direct insurance brand power and customer switching costs remain weaker moats, reflecting industry challenges.
Despite its strengths, EG is currently trading at a notable discount compared to industry peers. Its price-to-earnings (P/E) ratio of 10.59 is below the industry average of 13.17, and its forward P/E of 6.64 suggests strong anticipated earnings growth. Similarly, EG’s price-to-book (P/B) ratio of 1.03 remains well below the P&C insurance industry average of 2.33, positioning the company as undervalued relative to its assets. Historical P/B trends further reinforce this, as EG is currently trading near the lower end of its valuation range. However, the company’s combined ratio—a key measure of underwriting profitability—fluctuated significantly, reaching 135.5% in Q4 2024 due to reserve strengthening in U.S. casualty lines, though its long-term trajectory remains solid. Meanwhile, return on equity (ROE) has demonstrated resilience, peaking at 18.85% in 2023 before slightly declining to 17.86% in 2024.
A key component of EG’s financial strength is its investment income, which contributed 13.61% of earned premiums in 2024. The company’s discounted cash flow (DCF) valuation suggests intrinsic values between $1,684 and $2,534 per share, with an implied margin of safety exceeding 85%. Given its robust fundamentals, undervaluation, and long-term growth potential, EG presents a compelling investment opportunity with significant upside.
Everest Group, Ltd. (EG) is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 47 hedge fund portfolios held EG at the end of the third quarter which was 35 in the previous quarter. While we acknowledge the risk and potential of EG as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than EG but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article was originally published at Insider Monkey.