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Reasons Why CNA Financial (CNA) Stock is an Attractive Pick
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CNA Financial Corporation (CNA - Free Report) has been in investors’ good books owing to the new business growth, higher net earned premium and effective capital deployment.
Optimistic Growth Projections
The consensus estimate for 2023 and 2024 earnings is pegged at $4.25 and $4.41, indicating a 10.6% and 3.8% increase from the year-ago reported figure, driven by 5.8% and 2.8% higher revenues of $11.1 billion and $11.4 billion, respectively. 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 #2 (Buy). In the past year, the stock has lost 5.9%, against the industry’s increase of 0.8%.
Image Source: Zacks Investment Research
Return on Equity (ROE)
CNA Financial’s ROE for the trailing 12 months is 11.3%, expanding 250 basis points year over year. ROE reflects the insurer’s efficiency in using shareholders’ funds.
Style Score
CNA Financial has a favorable VGM Score of B. The VGM Score helps identify stocks with the most attractive value, the best growth and the most promising momentum.
Business Tailwinds
CNA Financial remains well-poised to gain from a rise in new businesses, strong rate, lower net catastrophe losses, improved non-catastrophe current accident year underwriting results and higher net earned premium, which contribute to premium growth across its Specialty, Commercial and International segments.
The fixed-income portfolio continues to provide consistent earnings. Higher returns in the limited partnership portfolio, improved current accident year underwriting results and growth in invested asset base are likely to contribute to its net investment income.
Both loss and expense ratios stand to gain from lower net catastrophe losses, higher net earned premiums, lower acquisition costs, lower underwriting expenses and improved non-catastrophe current accident year underwriting results.
CNA Financial has been witnessing substantial improvement in the combined ratio over the past few years. The P&C combined ratio improved 300 basis points year over year to 93 in 2022. The improved combined ratio reflects a stable underlying combined ratio, lower catastrophe losses and increased favorable prior period development.
CNA Financial continues to maintain a conservative capital structure with a leverage ratio of 18%, excluding AOCI. Operating cash flow in 2022 surged 25.3%, driven by the prior year payment of the Excess Workers' Compensation and Loss Portfolio Transfer premium.
In February 2023, CNA Financial’s board approved a 5% hike in quarterly dividend. Simultaneously, CNA announced a special dividend of $1.20 per share, marking nine special dividends. The insurer’s quarterly dividend payment has witnessed a ten-year CAGR (2013-2023) of 7.7%. The current dividend yield of 3.7% is better than the industry average of 0.3%.
CNA Financial has an impressive Value Score of A, reflecting an attractive valuation of the stock.
Axis Capital beat estimates in three of the last four quarters and missed in one, the average being 5.70%. The Zacks Consensus Estimate for both 2023 and 2024 has moved 0.1% north in the past seven days.
The Zacks Consensus Estimate for AXS’ 2023 and 2024 earnings per share is pegged at $7.53 and $8.42, indicating year-over-year increase of 29.6% and 11.7%, respectively. In the past year, AXS has gained 11.1%.
The Zacks Consensus Estimate for Everest Re’s 2023 and 2024 earnings per share is pegged at $44.68 and $51.29, indicating year-over-year increase of 64.9% and 14.7%, respectively. In the past year, RE has gained 28.7%.
RE beat estimates in each of the last four quarters, the average being 18.41%.
The Zacks Consensus Estimate for Selective Insurance’s 2023 and 2024 earnings per share is pegged at $6.57 and $7.55, indicating year-over-year increase of 30.6% and 14.9%, respectively. In the past year, SIGI has gained 30.5%.
The Zacks Consensus Estimate for SIGI’s 2023 and 2024 earnings has moved 8.9% and 9.7% north in the past 30 days.
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Reasons Why CNA Financial (CNA) Stock is an Attractive Pick
CNA Financial Corporation (CNA - Free Report) has been in investors’ good books owing to the new business growth, higher net earned premium and effective capital deployment.
Optimistic Growth Projections
The consensus estimate for 2023 and 2024 earnings is pegged at $4.25 and $4.41, indicating a 10.6% and 3.8% increase from the year-ago reported figure, driven by 5.8% and 2.8% higher revenues of $11.1 billion and $11.4 billion, respectively. 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 #2 (Buy). In the past year, the stock has lost 5.9%, against the industry’s increase of 0.8%.
Image Source: Zacks Investment Research
Return on Equity (ROE)
CNA Financial’s ROE for the trailing 12 months is 11.3%, expanding 250 basis points year over year. ROE reflects the insurer’s efficiency in using shareholders’ funds.
Style Score
CNA Financial has a favorable VGM Score of B. The VGM Score helps identify stocks with the most attractive value, the best growth and the most promising momentum.
Business Tailwinds
CNA Financial remains well-poised to gain from a rise in new businesses, strong rate, lower net catastrophe losses, improved non-catastrophe current accident year underwriting results and higher net earned premium, which contribute to premium growth across its Specialty, Commercial and International segments.
The fixed-income portfolio continues to provide consistent earnings. Higher returns in the limited partnership portfolio, improved current accident year underwriting results and growth in invested asset base are likely to contribute to its net investment income.
Both loss and expense ratios stand to gain from lower net catastrophe losses, higher net earned premiums, lower acquisition costs, lower underwriting expenses and improved non-catastrophe current accident year underwriting results.
CNA Financial has been witnessing substantial improvement in the combined ratio over the past few years. The P&C combined ratio improved 300 basis points year over year to 93 in 2022. The improved combined ratio reflects a stable underlying combined ratio, lower catastrophe losses and increased favorable prior period development.
CNA Financial continues to maintain a conservative capital structure with a leverage ratio of 18%, excluding AOCI. Operating cash flow in 2022 surged 25.3%, driven by the prior year payment of the Excess Workers' Compensation and Loss Portfolio Transfer premium.
In February 2023, CNA Financial’s board approved a 5% hike in quarterly dividend. Simultaneously, CNA announced a special dividend of $1.20 per share, marking nine special dividends. The insurer’s quarterly dividend payment has witnessed a ten-year CAGR (2013-2023) of 7.7%. The current dividend yield of 3.7% is better than the industry average of 0.3%.
CNA Financial has an impressive Value Score of A, reflecting an attractive valuation of the stock.
Other Stocks to Consider
Some top-ranked stocks from the property and casualty insurance industry are Axis Capital Holdings Limited (AXS - Free Report) , Everest Re Group, Ltd. and Selective Insurance Group, Inc. (SIGI - Free Report) , each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Axis Capital beat estimates in three of the last four quarters and missed in one, the average being 5.70%. The Zacks Consensus Estimate for both 2023 and 2024 has moved 0.1% north in the past seven days.
The Zacks Consensus Estimate for AXS’ 2023 and 2024 earnings per share is pegged at $7.53 and $8.42, indicating year-over-year increase of 29.6% and 11.7%, respectively. In the past year, AXS has gained 11.1%.
The Zacks Consensus Estimate for Everest Re’s 2023 and 2024 earnings per share is pegged at $44.68 and $51.29, indicating year-over-year increase of 64.9% and 14.7%, respectively. In the past year, RE has gained 28.7%.
RE beat estimates in each of the last four quarters, the average being 18.41%.
The Zacks Consensus Estimate for Selective Insurance’s 2023 and 2024 earnings per share is pegged at $6.57 and $7.55, indicating year-over-year increase of 30.6% and 14.9%, respectively. In the past year, SIGI has gained 30.5%.
The Zacks Consensus Estimate for SIGI’s 2023 and 2024 earnings has moved 8.9% and 9.7% north in the past 30 days.