The 10-second takeaway
For the quarter ended Dec. 31 (Q4), RLI beat expectations on revenues and crushed expectations on earnings per share.
Compared to the prior-year quarter, revenue grew, and earnings per share contracted significantly.
Margins dropped across the board.
RLI tallied revenue of $164.0 million. The six analysts polled by S&P Capital IQ wanted to see revenue of $153.4 million. Sales were 8.1% higher than the prior-year quarter's $151.7 million.
Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions.
Non-GAAP EPS came in at $1.35. The nine earnings estimates compiled by S&P Capital IQ predicted $1.11 per share on the same basis. GAAP EPS of $1.43 for Q4 were 25% lower than the prior-year quarter's $1.90 per share.
Source: S&P Capital IQ. Quarterly periods. Figures may be non-GAAP to maintain comparability with estimates.
For the quarter, gross margin was 35.4%, 830 basis points worse than the prior-year quarter. Operating margin was 26.5%, 790 basis points worse than the prior-year quarter. Net margin was 18.7%, 780 basis points worse than the prior-year quarter.
Next quarter's average estimate for revenue is $155.9 million. On the bottom line, the average EPS estimate is $1.10.
Next year's average estimate for revenue is $638.5 million. The average EPS estimate is $4.31.
The stock has a five-star rating (out of five) at Motley Fool CAPS, with 89 members out of 96 rating the stock outperform, and seven members rating it underperform. Among 35 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 32 give RLI a green thumbs-up, and three give it a red thumbs-down.
Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on RLI is hold, with an average price target of $66.86.
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Seth Jayson had no position in any company mentioned here at the time of publication. You can view his stock holdings here. He is co-advisor of Motley Fool Hidden Gems, which provides new small-cap ideas every month, backed by a real-money portfolio. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.