Despite QBE Insurance Group Ltd (ASX: QBE) commanding a market capitalisation of $17 billion, it's probably not on the radar of many investors at the moment.
That's understandable for a couple of reasons.
Firstly, the share price of QBE has crashed around 45% over the past decade. That's too painful for even the most hardened investor to bare!
Secondly, insurance companies are complex to analyse and harbour plenty of financial risks which are difficult for outsiders to accurately assess and account for.
Despite these valid reasons for passing on the stock, a case can also be made for suggesting that the stock offers an attractive investment thesis.
After many years of underperformance – at least in part due to an excessively aggressive 'growth by acquisition' strategy under former management – QBE's business model has been overhauled and arguably the company is now positioned on a more maintainable future path.
Based on analyst consensus estimates provided by Reuters, QBE is expected to grow earnings per share (EPS) to 85.6 cents per share (cps) in the current 2016 calendar year, with earnings per share then expanding to 99.1 cps in 2017.
Assuming the dividend roughly keeps pace with EPS growth then I think it could be reasonable to expect a dividend somewhere around the 85 cps mark in 2017.
With QBE trading near $12 a share, the above forecasts for 2017 would suggest a price-to-earnings ratio and dividend yield of 12.1x and 7.1% respectively.
