RLI Corp. (NYSE:RLI) just released its latest quarterly results and things are looking bullish. RLI delivered a significant beat to revenue and earnings per share (EPS) expectations, hitting US$470m-12% above indicated-andUS$2.06-104% above forecasts- respectively This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.
Following the latest results, RLI's nine analysts are now forecasting revenues of US$1.82b in 2025. This would be a reasonable 3.0% improvement in revenue compared to the last 12 months. Statutory earnings per share are expected to crater 27% to US$6.71 in the same period. In the lead-up to this report, the analysts had been modelling revenues of US$1.80b and earnings per share (EPS) of US$6.49 in 2025. The analysts seems to have become more bullish on the business, judging by their new earnings per share estimates.
The consensus price target was unchanged at US$178, implying that the improved earnings outlook is not expected to have a long term impact on value creation for shareholders. 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. Currently, the most bullish analyst values RLI at US$185 per share, while the most bearish prices it at US$165. The narrow spread of estimates could suggest that the business' future is relatively easy to value, or thatthe analysts have a strong view on its prospects.
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. It's pretty clear that there is an expectation that RLI's revenue growth will slow down substantially, with revenues to the end of 2025 expected to display 2.4% growth on an annualised basis. This is compared to a historical growth rate of 15% over the past five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 5.1% per year. Factoring in the forecast slowdown in growth, it seems obvious that RLI is also expected to grow slower than other industry participants.
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. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting that it's tracking in line with expectations. Although our data does suggest that RLI's revenue is expected to perform worse than 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.
Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have forecasts for RLI going out to 2026, and you can see them free on our platform here.
Don't forget that there may still be risks. For instance, we've identified 1 warning sign for RLI that you should be aware of.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.
