Much to the delight of its shareholders, the Suncorp Group Ltd (ASX: SUN) share price has been amongst the best performers in the insurance industry this year.
At present its shares are up 7% year-to-date, stretching its 12-month return to an impressive 16%.
Is it still a buy?
This gain means that Suncorp's shares are changing hands at a little under 17x trailing earnings.
Whilst this is significantly cheaper than rival Insurance Australia Group Ltd (ASX: IAG) which trades at 24x trailing earnings, it is close to the average earnings multiple its shares have traded at over the last five years.
With that in mind, I would say that Suncorp's shares are about fair value now and offer limited upside potential in the near-term.
But that doesn't necessarily mean I think investors should sell the insurance giant's shares today. With a trailing fully franked 4.9% dividend, I would hold tight to its shares for the long-term.
Especially with its new operating model showing signs of promise early on. The One Suncorp strategy has played a key role in the company's improved underlying insurance trading ratio (ITR) this year.
Suncorp's ITR rose from 10.1% to 11% during the first-half of FY 2017. Pleasingly, management believes it is on course to reach 12% in the near future.
As the ITR increases, so too does Suncorp's profitability. If it can reach 12% then this should allow the company to grow its earnings and dividend at a solid rate.
Overall, whilst it isn't the bargain buy it was 12 months ago, I would still class the insurer's shares as a hold today.
