Markel Group (MKL) Up 7% Since Last Earnings Report: Can It Continue?

It has been about a month since the last earnings report for
Markel Group (MKL). Shares have added about 7% in that time frame,
outperforming the S&P 500.

Will the recent positive trend continue leading up to its next
earnings release, or is Markel Group due for a pullback? Before we
dive into how investors and analysts have reacted as of late, let's
take a quick look at its most recent earnings report in order to
get a better handle on the important drivers.

Markel's Q4 Earnings Beat, Revenues Lag Estimates

Markel Group Inc. reported fourth-quarter 2023 net operating
earnings per share of $56.48, which beat the Zacks Consensus
Estimate by 139.5%. The bottom line more than doubled year
over year. Markel witnessed improved earned premiums and increased
net investment income.

Quarterly Operational
Update

Total operating revenues of $3.7
billion missed the Zacks Consensus Estimate by 1.1%. The top line
rose 2.7% year over year. Net investment income increased 46.9%
year over year to $213 million in the fourth quarter. MKL's
combined ratio deteriorated 1300 basis points (bps) year over year
to 107 in the reported quarter.

Full-Year Update

Revenues of $15.8 billion increased
35.4% from 2022. Earned premiums grew 9% to $8.3 billion,
reflecting growth in gross premium volume in recent periods
Combined ratio deteriorated 600 bps to 98, primarily attributable
to a higher attritional loss ratio.

Segment Update

Insurance: Gross premiums increased 7% year over
year to $9.2 billion. The uptick was driven by more favorable rates
and new business growth across many product lines, most notably
personal lines and property product lines.

Underwriting profit came in at $162.2 million, down 71% year
over year. The combined ratio deteriorated 620 bps year over year
to 97.8. It included $39.6 million of net losses and loss
adjustment expenses attributed to the 2023 catastrophes.

Reinsurance: Gross premiums decreased 15% year
over year to $1 billion, primarily attributable to lower gross
premiums within professional liability product lines.

Underwriting loss was $19.3 million against the year-ago
income of $83.8 million. The combined ratio deteriorated 980 bps
year over year to 101.9 in 2023. It included $57.1 million of
adverse development on prior accident years' loss reserves.

Markel Ventures: Operating revenues of $5 billion
improved 5% year over year. The growth was driven by higher
revenues at construction services businesses and
transportation-related businesses, as well as a contribution from
Metromont.

Operating income of $437.5 million increased 55% year over
year, driven by products businesses, particularly consumer and
building products businesses.

Financial Update

Markel exited 2023 with invested
assets of $30.8 billion, up from $27.4 billion at 2022 end. The
debt balance decreased year over year to $3.8 billion as of Dec 31,
2023 from $4.1 billion at 2022 end.

Shareholders' equity of $15 billion at 2023 end decreased
from $13.2 billion at 2022 end. Book value per share increased
17.1% from year-end 2022 to $1,095.95 as of Dec 31, 2023.

Net cash provided by operating activities was $2.8 billion in
2023, up from $2.7 billion in 2022, reflecting an increase in
operating cash flows from Markel Ventures and investments.

How Have Estimates Been Moving Since Then?

It turns out, estimates review have trended downward during the
past month.

The consensus estimate has shifted -14.66% due to these
changes.

VGM Scores

Currently, Markel Group has a nice Growth Score of B, though it
is lagging a lot on the Momentum Score front with an F. However,
the stock was allocated a grade of B on the value side, putting it
in the second quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of C. If you
aren't focused on one strategy, this score is the one you should be
interested in.

Outlook

Estimates have been broadly trending downward for the stock, and
the magnitude of these revisions indicates a downward shift.
Notably, Markel Group has a Zacks Rank #3 (Hold). We expect an
in-line return from the stock in the next few months.

Performance of an Industry Player

Markel Group is part of the Zacks Diversified Operations
industry. Over the past month, General Electric (GE), a stock from
the same industry, has gained 15.9%. The company reported its
results for the quarter ended December 2023 more than a month
ago.

GE reported revenues of $18.52 billion in the last reported
quarter, representing a year-over-year change of -15%. EPS of $1.03
for the same period compares with $1.24 a year ago.

GE is expected to post earnings of $0.64 per share for the
current quarter, representing a year-over-year change of +137%.
Over the last 30 days, the Zacks Consensus Estimate has changed
-1.1%.

The overall direction and magnitude of estimate revisions
translate into a Zacks Rank #3 (Hold) for GE. Also, the stock has a
VGM Score of D.

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