Selective Insurance Trades Above 50-Day SMA: Time to Buy the Stock?

Selective Insurance Group, Inc. SIGI has been trading above its 50-day simple moving average (SMA), signaling a short-term bullish trend. As of April 11, 2025, its share price was $86.63, down 17.2% from its 52-week high of $104.67.

The 50-day SMA is a key indicator for traders and analysts to identify support and resistance levels. It is considered particularly important as it is the first marker of an uptrend or downtrend. 

Strong segmental results, focus on accelerating growth and a stable capital position should continue to drive Selective Insurance.

SIGI Price Movement vs. 50-Day Moving Average

SIGI Lags Industry

SIGI has lost 7.4% year to date, underperforming the industry in the same time frame.

SIGI vs. Industry

SIGI Shares Are Expensive

SIGI shares are trading at a premium to the industry. Its price-to-book of 1.8 is higher than the industry average of 1.61X.

Shares of other players like Cincinnati Financial Corporation CINF, CNA Financial Corporation CNA and AXIS Capital Holdings Limited AXS are trading at a multiple lower than the industry.

Average Target Price Reflects an Upside

Based on short-term price targets offered by seven analysts, the Zacks average price target is $93.57 per share. The average indicates a potential 8.8% upside from the last closing price.

Optimistic Growth Projections for SIGI

The Zacks Consensus Estimate for 2025 earnings is pegged at $7.43, indicating a 127.2% year-over-year increase on 10.4% higher revenues of $5.4 billion. The consensus estimate for 2026 is pegged at $8.34, indicating a 12.3% year-over-year increase on 7.9% higher revenues of $5.8 billion. 

Mixed Analyst Sentiment for SIGI

The Zacks Consensus Estimate for 2025 earnings has moved 0.7% south while the same for 2026 has moved 0.3% north in the last seven days.

SIGI’s Favorable Return on Capital

Return on equity, which reflects the company’s efficiency in utilizing shareholders' funds, was 7.3% in the trailing 12 months, lower than the industry average of 8.3%. 

 Return on invested capital in the trailing 12 months was 3.7%, lagging the industry average of 6.4%. It reflects SIGI’s inefficiency in utilizing funds to generate income.

SIGI’s Growth Path

Selective Insurance has been focused on improving its organic growth. Its growth strategy includes appointing new distribution partners to achieve a 25% agent market share and expanding to new states. The insurer also looks to increase its share of distribution partners' overall premium to 12%  at its Commercial Lines business.

Better pricing, new business growth and a high retention ratio should continue to drive overall premium. 

SIGI is focused on geographic expansion. Over the years, the company has successfully expanded in New Hampshire and has a presence in the Southwest region, such as Arizona, Colorado, Utah and Mexico. As a result, the company now has a total commercial lines presence in 27 states and expects to expand to new states.

Despite a low interest rate environment, SIGI has managed to deliver impressive investment results. We estimate net investment income to grow, banking on an increased invested asset base and higher book yields. Selective Insurance estimates an after-tax net investment income of $405 million in 2025.

Its strong operating cash flow provides ample financial flexibility to support organic growth plans and execute strategic initiatives.

How Should You Play SIGI Stock Now?

Solid renewal pure pricing, high retention and new business growth in Commercial Lines and Excess and Supply Lines poise the insurer well for growth. 

Its wealth distribution remains impressive. As part of wealth distribution, the company regularly raises dividends as well as buys back shares. Its dividend yield of 1.8% compares favorably with the industry, making SIGI an attractive pick for yield- seeking investors. 

An increase in expense has been weighing on margin expansion. Despite SIGI’s leverage comparing favorably with the industry average, its times interest earned compares unfavorably with the industry. Given the premium valuation and unfavorable return on capital, it is better to adopt a wait-and-see approach for this Zacks Rank #3 (Hold) stock in the near term. 

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.



 

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This article originally published on Zacks Investment Research (zacks.com).

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