Stock Analysis

Earnings Beat: Selective Insurance Group, Inc. Just Beat Analyst Forecasts, And Analysts Have Been Updating Their Models

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As you might know, Selective Insurance Group, Inc. (NASDAQ:SIGI) just kicked off its latest yearly results with some very strong numbers. It was overall a positive result, with revenues beating expectations by 2.1% to hit US$2.9b. Selective Insurance Group also reported a statutory profit of US$4.09, which was an impressive 32% above what the analysts had forecast. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Selective Insurance Group after the latest results.

See our latest analysis for Selective Insurance Group

NasdaqGS:SIGI Earnings and Revenue Growth February 1st 2021

Taking into account the latest results, the consensus forecast from Selective Insurance Group's six analysts is for revenues of US$3.09b in 2021, which would reflect an okay 5.7% improvement in sales compared to the last 12 months. Statutory earnings per share are predicted to rise 6.0% to US$4.33. Before this earnings report, the analysts had been forecasting revenues of US$3.08b and earnings per share (EPS) of US$4.23 in 2021. The analysts seems to have become more bullish on the business, judging by their new earnings per share estimates.

There's been no major changes to the consensus price target of US$69.40, suggesting that the improved earnings per share outlook is not enough to have a long-term positive impact on the stock's valuation. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. There are some variant perceptions on Selective Insurance Group, with the most bullish analyst valuing it at US$72.00 and the most bearish at US$67.00 per share. With such a narrow range of valuations, the analysts apparently share similar views on what they think the business is worth.

Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. Next year brings more of the same, according to the analysts, with revenue forecast to grow 5.7%, in line with its 6.3% annual growth over the past five years. Juxtapose this against our data, which suggests that other companies (with analyst coverage) in the industry are forecast to see their revenues grow 4.9% per year. So although Selective Insurance Group is expected to maintain its revenue growth rate, it's only growing at about the rate of the wider industry.

The Bottom Line

The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Selective Insurance Group's earnings potential next year. They also reconfirmed their revenue estimates, with the company predicted to grow at about the same rate as the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have estimates - from multiple Selective Insurance Group analysts - going out to 2022, and you can see them free on our platform here.

Even so, be aware that Selective Insurance Group is showing 1 warning sign in our investment analysis , you should know about...

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