RLI Corp. Just Beat Earnings Expectations: Here's What Analysts Think Will Happen Next

Simply Wall St
·4 min read

As you might know, RLI Corp. (NYSE:RLI) just kicked off its latest quarterly results with some very strong numbers. It was a solid earnings report, with revenues and statutory earnings per share (EPS) both coming in strong. Revenues were 13% higher than the analysts had forecast, at US$263m, while EPS were US$0.93 beating analyst models by 629%. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.

See our latest analysis for RLI

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Taking into account the latest results, the current consensus from RLI's five analysts is for revenues of US$995.8m in 2021, which would reflect a modest 5.5% increase on its sales over the past 12 months. Statutory earnings per share are expected to reduce 3.9% to US$2.71 in the same period. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$977.7m and earnings per share (EPS) of US$2.62 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$98.50, suggesting that the improved earnings per share outlook is not enough to have a long-term positive impact on the stock's valuation. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. Currently, the most bullish analyst values RLI at US$110 per share, while the most bearish prices it at US$87.00. Still, with such a tight range of estimates, it suggeststhe analysts have a pretty good idea of what they think the company is worth.

Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. It's clear from the latest estimates that RLI's rate of growth is expected to accelerate meaningfully, with the forecast 5.5% revenue growth noticeably faster than its historical growth of 3.7%p.a. over the past five years. Other similar companies in the industry (with analyst coverage) are also forecast to grow their revenue at 4.8% per year. RLI is expected to grow at about the same rate as its industry, so it's not clear that we can draw any conclusions from its growth relative to competitors.

The Bottom Line

The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards RLI following these results. 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. At Simply Wall St, we have a full range of analyst estimates for RLI going out to 2022, and you can see them free on our platform here..

Before you take the next step you should know about the 2 warning signs for RLI that we have uncovered.

This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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