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Why You Should Stay Invested in CNA Financial (CNA) Stock
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CNA Financial Corporation (CNA - Free Report) has been gaining momentum on the back of higher net earned premiums, higher new business, rate increases and sufficient liquidity.
Optimistic Growth Projections
The consensus estimate for 2023 earnings is pegged at $4.15, indicating a 12.5% increase from the year-ago reported figure on 6.1% higher revenues of $11 billion. The expected long-term earnings growth rate is pegged at 5%.
Earnings Surprise History
CNA Financial has a solid track record of beating earnings estimates in five of the last seven quarters.
Zacks Rank & Price Performance
CNA Financial currently carries a Zacks Rank #3 (Hold). In the past year, the stock has lost 6.7% against the industry’s increase of 8.6%.
Image Source: Zacks Investment Research
Return on Equity (ROE)
CNA Financial’s ROE for the trailing 12 months is 10.1%, expanding 70 basis points year over year. This compares favorably with the industry average of 6.7%. ROE reflects the insurer’s efficiency in using shareholders’ funds.
Style Score
CNA Financial has a favorable VGM Score of B. VGM Score helps identify stocks with the most attractive value, best growth and the most promising momentum.
Business Tailwinds
Higher new business and rate increases, improved current accident year underwriting results and higher net earned premiums are expected to drive the Specialty segment.
The Commercial segment stands to gain from higher rate and retention, lower catastrophe losses, higher net earned premiums as well as lower acquisition costs.
The International segment should continue to gain from higher rate, improved current accident year underwriting results, lower acquisition costs and higher net earned premiums, and improved current accident year underwriting results.
The fixed-income portfolio continues to provide consistent earnings. Returns in the limited partnership portfolio, common stock returns, improved current accident year underwriting results and growth in invested asset base should contribute to its net investment income.
Higher net earned premium growth should improve the expense ratio of CNA Financial, which in turn is expected to improve the underlying combined ratio. CNA Financial maintains a conservative capital structure and continues to sustain capital above target levels in support of the ratings. Its first-quarter operating cash flow was solid owing to improved underwriting and investment results. CNA maintains liquidity in the form of cash and short-term investments, which together provide sufficient liquidity to meet financial obligations.
On the back of a disciplined execution, denoted by strong underwriting results and confidence in future earnings performances, CNA Financial hiked its dividend over the past couple of years. CNA Financial raised its dividend at a nine-year (2014-2022) CAGR of 5.4%. Its current dividend yield of 3.8% is better than the industry average of 0.3%.
Berkshire Hathaway delivered a four-quarter average earnings surprise of 22.18%. In the past year, Berkshire Hathaway has gained 8.8%.
The Zacks Consensus Estimate for BRK.B’s 2022 and 2023 earnings implies a respective increase of 15% and 6.2% from the year-ago reported number.
American Financial’s earnings surpassed estimates in each of the last four quarters, the average beat being 28.16%. In the past year, American Financial has gained 1.7%.
The Zacks Consensus Estimate for AFG’s 2022 and 2023 earnings has moved 0.6% and 1.8% north, respectively, in the past seven days.
The bottom line of Kinsale Capital surpassed earnings estimates in each of the last four quarters, the average beat being 15.16%. In the past year, the insurer has gained 40.3%.
The Zacks Consensus Estimate for Kinsale Capital’s 2022 and 2023 earnings has moved 1.2% and 5.9% north, respectively, in the past 30 days.
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Why You Should Stay Invested in CNA Financial (CNA) Stock
CNA Financial Corporation (CNA - Free Report) has been gaining momentum on the back of higher net earned premiums, higher new business, rate increases and sufficient liquidity.
Optimistic Growth Projections
The consensus estimate for 2023 earnings is pegged at $4.15, indicating a 12.5% increase from the year-ago reported figure on 6.1% higher revenues of $11 billion. The expected long-term earnings growth rate is pegged at 5%.
Earnings Surprise History
CNA Financial has a solid track record of beating earnings estimates in five of the last seven quarters.
Zacks Rank & Price Performance
CNA Financial currently carries a Zacks Rank #3 (Hold). In the past year, the stock has lost 6.7% against the industry’s increase of 8.6%.
Image Source: Zacks Investment Research
Return on Equity (ROE)
CNA Financial’s ROE for the trailing 12 months is 10.1%, expanding 70 basis points year over year. This compares favorably with the industry average of 6.7%. ROE reflects the insurer’s efficiency in using shareholders’ funds.
Style Score
CNA Financial has a favorable VGM Score of B. VGM Score helps identify stocks with the most attractive value, best growth and the most promising momentum.
Business Tailwinds
Higher new business and rate increases, improved current accident year underwriting results and higher net earned premiums are expected to drive the Specialty segment.
The Commercial segment stands to gain from higher rate and retention, lower catastrophe losses, higher net earned premiums as well as lower acquisition costs.
The International segment should continue to gain from higher rate, improved current accident year underwriting results, lower acquisition costs and higher net earned premiums, and improved current accident year underwriting results.
The fixed-income portfolio continues to provide consistent earnings. Returns in the limited partnership portfolio, common stock returns, improved current accident year underwriting results and growth in invested asset base should contribute to its net investment income.
Higher net earned premium growth should improve the expense ratio of CNA Financial, which in turn is expected to improve the underlying combined ratio.
CNA Financial maintains a conservative capital structure and continues to sustain capital above target levels in support of the ratings. Its first-quarter operating cash flow was solid owing to improved underwriting and investment results. CNA maintains liquidity in the form of cash and short-term investments, which together provide sufficient liquidity to meet financial obligations.
On the back of a disciplined execution, denoted by strong underwriting results and confidence in future earnings performances, CNA Financial hiked its dividend over the past couple of years. CNA Financial raised its dividend at a nine-year (2014-2022) CAGR of 5.4%. Its current dividend yield of 3.8% is better than the industry average of 0.3%.
Stocks to Consider
Some better-ranked stocks from the property and casualty insurance industry are Berkshire Hathaway (BRK.B - Free Report) , American Financial Group, Inc. (AFG - Free Report) and Kinsale Capital Group, Inc. (KNSL - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Berkshire Hathaway delivered a four-quarter average earnings surprise of 22.18%. In the past year, Berkshire Hathaway has gained 8.8%.
The Zacks Consensus Estimate for BRK.B’s 2022 and 2023 earnings implies a respective increase of 15% and 6.2% from the year-ago reported number.
American Financial’s earnings surpassed estimates in each of the last four quarters, the average beat being 28.16%. In the past year, American Financial has gained 1.7%.
The Zacks Consensus Estimate for AFG’s 2022 and 2023 earnings has moved 0.6% and 1.8% north, respectively, in the past seven days.
The bottom line of Kinsale Capital surpassed earnings estimates in each of the last four quarters, the average beat being 15.16%. In the past year, the insurer has gained 40.3%.
The Zacks Consensus Estimate for Kinsale Capital’s 2022 and 2023 earnings has moved 1.2% and 5.9% north, respectively, in the past 30 days.