MKL - Markel Group: Higher-For-Longer Interest Rates Are Increasing Profitability

2024-06-02 11:24:49 ET

Summary

• Markel Group stock is up 15.6% in 2024, on track to meet the projected 24% increase for the full year.
• The Q1 results show positive performance in insurance, investments, and Markel Ventures.
• Markel accelerated its share buyback program, nearly doubling its purchases to $161 million and reducing the share count by 2.3% year-over-year.
• As interest rates remain high, Markel's float becomes more valuable, benefiting from increased yields.
• Despite the recent price increase, I still consider Markel's shares to be undervalued.

Introduction

Since my last article on Markel Group Inc. ( MKL ), so far the thesis has evolved as expected. I was projecting a 24% stock price increase for the full year 2024. In the first five months of the year, the stock has already risen by 15.6% with fundamentals backing up the share price increase.

While many companies struggle with rising interest expenses and shrinking net income margins in a high-interest rate environment, especially if it lasts enough time to roll over most of the debt, Markel continues to improve its profitability....

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