AXS Lags Industry, Trades at a Discount: Here's How to Play the Stock

Shares of other insurers like Kinsale Capital Group, Inc. KNSL have gained 8.5%, while Arch Capital Group Ltd. ACGL and Selective Insurance Group, Inc. SIGI have declined 4.7% and 3.8%, respectively, in the past month.

3- Month Price Performance: AXS, SIGI, ACGL, KNSL & Industry

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AXS' Attractive Valuation

Shares of AXIS Capital are trading at a 12-month trailing price-to-book value of 1.23X, which is lower than the industry average of 17.56X. The insurer has a Value Score of A.

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Shares of other insurers like ACGL, SIGI and KNSL are trading at a discount to the industry average.

AXS' Average Target Price Suggests Upside

Based on short-term price targets offered by 11 analysts, the Zacks average price target is $124.18 per share. The average suggests a potential 22% upside from the last closing price.

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AXS' Growth Projections

The Zacks Consensus Estimate for AXIS Capital’s 2026 earnings per share (EPS) indicates a year-over-year decrease of 2.6%. The consensus estimate for revenues is pegged at $7 billion, implying a 7% year-over-year improvement.

The consensus estimates for 2027 EPS and revenues indicate increases of 8.5% and 6.9%, respectively, from the corresponding 2026 estimates.

Earnings have grown 46.1% in the past five years, better than the industry average of 22.7. The expected long-term earnings growth is pegged at 1.9%.

Efficient Use of Shareholder Capital

Return on equity in the trailing 12 months was 17%, better than the industry average of 7.8%. This highlights the company’s efficiency in utilizing shareholders’ funds.

Factors Acting in Favor of AXS

AXIS Capital, a global specialty underwriter, has a strategic focus on specialty products, including professional liability, cyber insurance, marine, aviation, political risk and terrorism coverage. The insurer targets higher-margin, less commoditized segments of the insurance market, allowing it to leverage underwriting expertise, maintain pricing discipline and build strong client relationships. AXS' specialty underwriting focus, broader product capabilities and multichannel distribution support long-term premium growth.

The Insurance segment is poised to benefit from a diversified portfolio of global specialty businesses. Both the North American and Canadian insurance markets are benefiting from economic stability and rising demand for coverage amid increasing climate and cyber risks. Insurance growth is banking on robust premium growth and underwriting discipline. Gross premiums written increased 15% year over year to $2.2 billion in the second quarter of 2026, while net premiums written rose 6%.

AXIS Capital’s reinsurance business benefits from disciplined cycle management, an improving business mix and diversified distribution channels that expand market reach and support premium growth. AXIS Capacity Solutions further supports growth by using third-party capital to write larger gross lines while limiting retained risk. The platform generated nearly $4 million in fee income in the second quarter, with about $17 million expected for full-year 2026, adding fee income without a proportional increase in risk exposure.

Net investment income has been witnessing improvement over the last few years, as evident from its CAGR of 7.4% over the last nine-year period from 2017- 2025. Higher income from fixed maturities, supported by increased portfolio yields and income from cash and cash equivalents, should drive net investment income. As an important component of an insurer’s top line, higher net investment income should support overall revenue growth.

AXIS Capital continues to boost shareholder value through stock buybacks and dividend hikes. The insurer boasts one of the highest dividend yields among its peers, making it an attractive pick for yield-seeking investors. AXS had $53 million of remaining authorization under the open-ended board-authorized share repurchase program.

Risks for AXS

AXIS Capital remains exposed to natural catastrophes, severe convective storms and man-made events, which could increase claims volatility and weigh on underwriting profitability. Pre-tax catastrophe and weather-related losses were $80 million in the second quarter of 2026, contributing to a higher combined ratio of 93.1%.

AXS also faces intense competition and broader market softening, which could pressure pricing, terms and acquisition costs, limiting profitable growth.

AXS experiences losses or gains resulting from fluctuations in the values of non-U.S. currencies. Failing to manage the foreign currency exposures may adversely affect the business’s operating results.

End Notes

Growth in specialty insurance, an improving portfolio mix, Higher income from fixed maturities, and effective capital deployment should pave the way for growth. A VGM Score of B instills confidence. However, exposure to catastrophe losses, intense competition and foreign currency raises concern.

Coupled with the strong premium growth, higher ROE and the affordability of shares, it is wise to retain this Zacks Rank #3 (Hold) insurer. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.    

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This article originally published on Zacks Investment Research (zacks.com).

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