Value
5.4/10data confidence 83%| Component | Sub-score |
|---|---|
| P/E | 8.0 |
| P/S | 8.3 |
| EV/EBITDA | 5.1 |
| Fwd P/E | 5.6 |
| Analyst target | 3.0 |
- ▸Forward P/E: 23.0x
RLI · Why this verdict
Why RLI (RLI) is rated HOLD
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results. How we score · Editorial policy
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VerdictHOLD
Overall score4.5/10
ConfidenceMEDIUM
MacroRISK_OFF
TrendMatrix Research · core thesis
Engine thesis — one sentence
RLI Corp. is a specialty property and casualty insurer with a perfect four-quarter earnings beat streak and best-in-class margins, but the stock has already reached analyst price targets with negative implied upside, making it a hold rather than a compelling new entry.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
RLI has beaten earnings estimates in each of the last four consecutive quarters with an average positive surprise of 12%, reflecting consistent underwriting discipline and pricing power in specialty insurance lines. Earnings | The beat streak extends to six or more consecutive quarters as specialty insurance pricing continues to benefit from industry-wide reinsurance tightening. | ↓Deteriorating |
| CounterA perfect beat streak often means analyst estimates have been deliberately set conservatively; the true earnings trajectory may be flatter than the beat pattern implies. | ||
Net margins of 21%, a Piotroski F-Score of 7 out of 9, and a quality peer rank of 7.8 out of 10 place RLI among the best-run insurers in its peer group, supporting premium valuation over the medium term. Quality breakdown | Operating margins remain above 18% over the next four quarters as pricing discipline is maintained in specialty lines. | ↑Improving |
| CounterFree cash flow is only 20% of net income, indicating earnings quality concerns where reported profits are not converting to cash at the same rate. | ||
The current price of $53.59 is already at the resistance target of $53.75, producing negative upside of -8.4% relative to analyst consensus, meaning the stock offers no margin of safety for new buyers at current levels. Warnings | Analyst consensus price targets rise above $62 within 12 months as earnings growth is revised upward, restoring a positive risk-reward profile. | Tripped→Stable |
| CounterThe stock trading near analyst targets is a sign of recognition, not a ceiling; continued operational excellence can drive target upgrades that create a new entry window. | ||
Despite improving MACD, the stock is trading below its 200-day moving average with a slope of -3.1% over 30 days, signaling a confirmed downtrend that historically precedes further price weakness before a recovery. Momentum breakdown | Price reclaims the 200-day moving average and holds above it for at least 30 consecutive days, confirming the technical downtrend has reversed. | ↓Deteriorating |
| CounterFor a quality insurer with a perfect beat streak, technical weakness often reflects broader sector rotation rather than fundamental deterioration, creating a potential entry opportunity for patient investors. | ||
RLI has beaten earnings estimates in each of the last four consecutive quarters with an average positive surprise of 12%, reflecting consistent underwriting discipline and pricing power in specialty insurance lines.
↓DeterioratingEarnings
- Expectation
- The beat streak extends to six or more consecutive quarters as specialty insurance pricing continues to benefit from industry-wide reinsurance tightening.
CounterA perfect beat streak often means analyst estimates have been deliberately set conservatively; the true earnings trajectory may be flatter than the beat pattern implies.
Net margins of 21%, a Piotroski F-Score of 7 out of 9, and a quality peer rank of 7.8 out of 10 place RLI among the best-run insurers in its peer group, supporting premium valuation over the medium term.
↑ImprovingQuality breakdown
- Expectation
- Operating margins remain above 18% over the next four quarters as pricing discipline is maintained in specialty lines.
CounterFree cash flow is only 20% of net income, indicating earnings quality concerns where reported profits are not converting to cash at the same rate.
The current price of $53.59 is already at the resistance target of $53.75, producing negative upside of -8.4% relative to analyst consensus, meaning the stock offers no margin of safety for new buyers at current levels.
Tripped→StableWarnings
- Expectation
- Analyst consensus price targets rise above $62 within 12 months as earnings growth is revised upward, restoring a positive risk-reward profile.
CounterThe stock trading near analyst targets is a sign of recognition, not a ceiling; continued operational excellence can drive target upgrades that create a new entry window.
Despite improving MACD, the stock is trading below its 200-day moving average with a slope of -3.1% over 30 days, signaling a confirmed downtrend that historically precedes further price weakness before a recovery.
↓DeterioratingMomentum breakdown
- Expectation
- Price reclaims the 200-day moving average and holds above it for at least 30 consecutive days, confirming the technical downtrend has reversed.
CounterFor a quality insurer with a perfect beat streak, technical weakness often reflects broader sector rotation rather than fundamental deterioration, creating a potential entry opportunity for patient investors.
Per-dimension breakdown
Quality
6.1/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 7.4 |
| ROA | 3.4 |
| Gross margin | 2.7 |
| Op margin | 9.0 |
| Net margin | 10.0 |
| Current ratio | 4.2 |
| FCF quality | 5.6 |
| Moat | 5.8 |
| Piotroski F | 6.7 |
- ▸Strong margins: 20%
- ▸Earnings quality warning: 74% FCF/NI
Growth
0.5/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 0.9 |
| EPS growth | 0.0 |
- ▸Declining revenue: -6%
Momentum
4.5/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 4.0 |
| MACD | 10.0 |
| OBV | 1.0 |
| MA position | 7.5 |
| Volume | 0.0 |
- ▸Overbought (RSI 79)
- ▸Volume distribution (falling OBV)
- ▸Above 200-MA but MA slope flat/negative + RSI 79 (late-cycle distribution risk)
Sentiment
4.5/10data confidence 100%| Component | Sub-score |
|---|---|
| Analyst rating | 5.0 |
| Price target | 3.5 |
| erm sentiment | 5.0 |
- ▸Below analyst target
Insider
5.0/10data confidence 50%| Component | Sub-score |
|---|---|
| materiality | 5.0 |
| holder change | 5.0 |
- ▸No net insider activity — $0 (0.000% of mkt cap)
Peer rank
4.0/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 1.8 |
| quality rank | 6.9 |
| growth rank | 0.7 |
Technical
4.5/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 1.9 |
| support resistance | 1.7 |
| 52w position | 9.4 |
| gap | 5.0 |
Risk (lower is worse)
5.8/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 4.4 |
| days to cover | 0.0 |
| volatility | 5.1 |
| put call | 3.3 |
| implied vol | 8.2 |
| beta | 10.0 |
| debt equity | 9.3 |
Catalyst
7.4/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 3.5 |
| earnings history | 10.0 |
| earnings timing | 5.0 |
| surprise avg | 10.0 |
| dividend safety | 8.5 |
- ▸Perfect beat streak: 4Q
- ▸Dividend aristocrat: 1.1% yield
How the verdict was assembled
Engine trigger
Mixed signals. Hold existing position.
Engine technical detail
verdict_path:
L4:PATH_F_HOLD_DEFAULTPassed (7)
- MOMENTUM:4.5>=4.5
- INSIDER:OK
- 8K:CLEAN
- NEWS_EVENTS:NONE_RECENT
- EARNINGS_PROXIMITY:83d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (1)
- ASYMMETRY:-1.6=NEGATIVE
Warning (1)
- MOMENTUM:4.5<5.5 (soft — BUY_NOW allowed but watch)
Reward-to-Risk
-1.60
Upside
-24.0%
Downside
15.0%
Sizing output
AVOID
Setup— — No clear chart pattern; technical signals are mixed
EdgeNo clear edge — No clear edge identified
SuitabilitySpeculative — Binary industry: Insurance - Property & Casualty
Investment implication
The default F-path HOLD fired without any positive-conviction gate triggering — no momentum acceleration, no quality+value crossover, no setup recognition. Highest-clear gate: MOMENTUM:4.5>=4.5. Top dim: Catalyst at 7.4; weakest: Growth at 0.5. The engine's read is one of pattern absence — no directional conviction in either direction at current asymmetry.
The strongest dimensions are Catalyst at 7.4, Quality at 6.1, and Risk (lower is worse) at 5.8; the weakest are Growth at 0.5, Peer rank at 4.0, and Technical at 4.5. The V9 engine flagged 1 failed gate with 1 warning, producing an asymmetric reward-to-risk of -1.60 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Earnings Beat Streak Underwriting
Trip ifEPS surprise falls below 0% in at least 2 of the next 4 quarters, breaking the current beat streak.
- P2Best In Class Margins
Trip ifNet margin falls below 15% in any reported quarter, indicating underwriting discipline has deteriorated.
- P3Price At Analyst Target Negative AsymmetryTripped
Trip ifPrice rises above $62 without a corresponding analyst target upgrade, creating more than 15% downside to consensus targets.
- P4Momentum Death Cross Technical Risk
Trip ifPrice drops below $48, more than 10% below the current $53.59, confirming the death cross is driving sustained selling rather than a temporary pullback.