Can RLI Corp. (RLI) Keep the Earnings Streak Alive? - Analyst Blog

We expect property and casualty insurer RLI Corp.  RLI to beat expectations when it reports its first-quarter 2014 results on April 16.

Why a Likely Positive Surprise?

Our proven model shows that RLI Corp. is likely to beat earnings because it has the right combination of two key ingredients.

Zacks ESP: Expected Surprise Prediction or Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is +1.85%. This is very meaningful and a leading indicator of a likely positive earnings surprise for shares.

Zacks Rank: RLI Corp. has a Zacks Rank #3 (Hold). Note that stocks with Zacks Rank #1, 2 and 3 have significantly higher chances of beating earnings. The Sell-rated stocks (#4 and 5) should never be considered going into an earnings announcement.  

The combination of RLI Corp's Zacks Rank #3 and +1.85% ESP makes us very confident in looking forward to a positive earnings beat on April 16.

What is Driving the Better-than-Expected Earnings?

Better market conditions and new product offerings aiding higher premiums, coupled with a benign cat environment favoring better underwriting results, are expected to drive RLI Corp. to outperform in the first quarter.

The positive trend is backed by the trailing three-quarter average surprise of 29.1%, much of which was contributed by the 48.9% surprise achieved in the third quarter of 2013. Better underwriting results continue to aid the company's performance.

Other Stocks to Consider

Here are some other companies you may want to consider as our model shows they have the right combination of elements to post an earnings beat this coming quarter:  

Everest Re Group Ltd. RE, earnings ESP of +16.67% and a Zacks Rank #1 (Strong Buy).

RenaissanceRe Holdings Ltd. RNR, earnings ESP of +13.36% and a Zacks Rank #1.

ACE Limited ACE earnings ESP of +3.32% and a Zacks Rank #1.