Since March 2026, RLI has been in a holding pattern, posting a small return of 0.8% while floating around $61.22. The stock also fell short of the S&P 500’s 13.1% gain during that period.
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Why Is RLI Not Exciting?
We’re cautious about RLI. Here are three reasons why RLI doesn’t excite us, plus one stock we’d rather own.
Recent EPS Growth Below Our Standards
While long-term earnings trends give us the big picture, we also track EPS over a shorter period because it can provide insight into an emerging theme or development for the business.
RLI’s weak 9.1% annual EPS growth over the last two years aligns with its revenue trend. On the bright side, this tells us its incremental sales were profitable.
Substandard BVPS Growth Indicates Limited Asset Expansion
For insurers, book value per share (BVPS) is a vital measure of financial health, representing the total assets available to shareholders after accounting for all liabilities, including policyholder reserves and claims obligations.
RLI’s BVPS increased by a meager 6.8% annually over the last five years, and its recent performance paints an even worse picture as growth has decelerated a bit to a sluggish 5% over the past two years (from $17.32 to $19.09 per share).
Final Judgment
RLI isn’t a terrible business, but it doesn’t pass our quality test. With its shares trailing the market in recent months, the stock trades at 3.3× forward P/B (or $61.22 per share). This valuation tells us a lot of optimism is priced in - we think there are better stocks to buy right now. Let us point you toward the most entrenched endpoint security platform on the market.
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