James River Group (JRVR) reports fourth-quarter loss, top revenue estimate

James River Group (JRVR) came out with quarterly loss of $1.81 per share versus the Zacks Consensus Estimate of $0.46. For comparison, a year earlier the loss was $0.95 per share. These numbers have been adjusted for one-off items.

This quarterly report represents an earnings surprise of -493.48%. A quarter ago, it was expected that this insurance holding company would post a loss of $0.20 per share when it actually produced a loss of $0.72, delivering a surprise of -260%.

Over the last four quarters, the company has surpassed consensus EPS estimates only once.

James River Group, which belongs to the Zacks Insurance – Multi line industry, posted revenues of $207.34 million for the quarter ended December 2021, surpassing the Zacks Consensus Estimate by 5.46%. For comparison, revenues from the previous year amounted to $194.19 million. The company has topped consensus revenue estimates twice over the last four quarters.

The sustainability of the immediate share price movement based on the recently-released numbers and future earnings expectations will largely depend on management’s commentary on the earnings call.

Shares of James River Group are down about 8% year to date, compared with the S&P 500 Index’s decline of -8%.

What’s next for James River Group?

While James River Group has outperformed the market this year, the question that comes to investors’ minds is: what’s next for the stock?

There are no simple answers to this key question, but one reliable measure that can help investors address this issue is the company’s earnings prospects. Not only does this include current consensus earnings expectations for the coming quarter(s), but also how these expectations have changed lately.

Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. Investors can track such revisions by themselves or rely on a tried-and-tested rating tool like the Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions.

Ahead of the earnings release, the estimate revision trend for James River Group is mixed. While the magnitude and direction of estimate revisions may change following the company’s just-released earnings report, the current status translates into a Zacks Rank #3 (Hold) stock. Therefore, the company’s stock is expected to perform in line with the market in the near future. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

It will be interesting to see how estimates for the next quarters and the current fiscal year change in the coming days. The current consensus EPS estimate is $0.59 on $198.5 million in revenues for the coming quarter and $2.40 on $812.4 million in revenues for the current fiscal year.

Investors should be aware that the outlook for the industry may also have a significant impact on share prices. In terms of the Zacks Industry Rank, the Insurance – Multi line is currently in the bottom 31% of the 250+ Zacks industries. Our research shows that the top 50% of Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1.

One more company in the same industry, Trean Insurance (TIG), is yet to report results for the quarter ended December 2021. The results are expected to be released on March 9.

The company is expected to post quarterly earnings of $0.08 per share in its upcoming report, which would represent a year-over-year change of -63.6%. The consensus EPS estimate for the quarter has not changed over the last 30 days.

Trean Insurance’s revenue is expected to be $55.91 million, up 42.5% from the year-ago quarter.

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