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Factors Setting the Tone for Allstate's (ALL) Q4 Earnings
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The Allstate Corporation (ALL - Free Report) is scheduled to release fourth-quarter 2023 results on Feb 7, after the closing bell.
Q4 Estimates
The Zacks Consensus Estimate for Allstate’s fourth-quarter earnings per share (EPS) is pegged at $3.87. A loss of $1.36 per share was reported in the prior-year quarter.
The consensus mark for revenues is $15.1 billion, which indicates an improvement of 11.1% from the prior-year quarter’s reported figure.
Allstate’s bottom line beat estimates in three of the trailing four quarters and missed the mark once, the average surprise being 31.5%. This is depicted in the chart below:
Before we get into what to expect for the to-be-reported quarter in detail, it is worth looking at ALL’s prior-quarter performance.
Q3 Earnings Rewind
In the last reported quarter, the company reported adjusted EPS of 81 cents per share, which outpaced the Zacks Consensus Estimate by a whopping 107.7%. The quarterly results benefited on the back of continued rate hikes, strong underwriting results and sound contribution from the Protection Services unit. However, the upside was partly offset by the continued incidence of auto insurance loss costs, a significant increase in catastrophe losses and an elevated expense level.
Now, let’s see how things have shaped up prior to the fourth-quarter earnings announcement.
Factors to Note
Allstate’s revenues are likely to have benefited on the back of improved net premiums earned, attributable to rate increases. We estimate net premiums earned to grow 12.2% year over year to $13.3 billion in the fourth quarter. Net investment income is anticipated to have received an impetus from higher fixed income yields and increased duration of bonds.
Strong segmental contributions are also expected to have driven ALL’s quarterly performance. The Property-Liability segment is likely to have been aided by higher earned premiums, which, in turn, are likely to have stemmed from rate increases in the auto and homeowners insurance business. Our estimate for the unit’s premiums earned is $12.7 billion, which indicates an improvement of 11.3% year over year.
The auto insurance business is expected to have been aided by expanding earned premiums, lower expenses and reduced adverse non-catastrophe prior-year reserve re-estimates in the fourth quarter. Although the elevated loss cost trend continues to persist, continued execution of rate increases should have resulted in improved performance of this segment.
Meanwhile, the homeowners’ insurance business is likely to have received a boost from improved average gross premium per policy in the Allstate and National General brands coupled with a rise in policies in force. However, the continued incidence of catastrophe losses is expected to have acted as a partial offset for both the business’ quarterly performance.
Inevitably, catastrophe losses are likely to have hurt the overall underwriting results of Allstate in the to-be-reported quarter and led to a deterioration in the combined ratio.
The Protection Services segment is expected to have been aided by the strength of Allstate Protection Plans and Allstate Dealer Services coupled with expanding international operations. We expect the unit’s revenues to rise 25.4% year over year to $811 million. However, the upside is likely to have been partly offset by a higher share of lower-margin business and higher severity of claims.
Additionally, improved premiums and contract charges, as well as higher revenues derived from group health products, are likely to have contributed to the performance of the Allstate Health and Benefits segment in the to-be-reported quarter. However, the upside is likely to have been partly offset by a decline in individual health and employer voluntary benefits and, escalating expenses linked with system investments. Our estimate for the unit’s revenues is $574.6 million, up 2.6% year over year.
What Our Quantitative Model Predicts
Our proven model does not conclusively predict an earnings beat for Allstate this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. However, that’s not the case here, as you see below.
Earnings ESP: Allstate has an Earnings ESP of 0.00%. The Most Accurate Estimate is pegged at $3.87, in line with the Zacks Consensus Estimate. You can uncover the best stocks before they’re reported with our Earnings ESP Filter.
Zacks Rank: ALL currently carries a Zacks Rank of 3.
Stocks to Consider
Here are some other companies from the insurance space, which according to our model, have the right combination of elements to beat on earnings this time around:
The Zacks Consensus Estimate for PRI’s fourth-quarter 2023 earnings is pegged at $4.26 per share, indicating an improvement of 22.1% from the prior-year quarter’s reported number.
Primerica’s earnings beat estimates in each of the trailing four quarters, the average surprise being 7.8%.
Everest Group, Ltd. (EG - Free Report) has an Earnings ESP of +1.18% and a Zacks Rank of 3, at present. The Zacks Consensus Estimate for EG’s fourth-quarter 2023 earnings is pegged at $14.63 per share, suggesting 19.8% growth from the year-ago quarter’s reported figure.
Everest Group’s earnings beat estimates in three of the trailing four quarters and missed the mark once, the average surprise being 24.50%.
Willis Towers Watson Public Limited Company (WTW - Free Report) has an Earnings ESP of +0.23% and a Zacks Rank of 3, at present. The Zacks Consensus Estimate for WTW’s fourth-quarter 2023 earnings is pegged at $7.04 per share, which implies an 11.2% rise from the year-ago quarter’s reported figure.
The stock has witnessed two upward estimate revisions compared with no downward revisions for fourth-quarter earnings over the past 30 days.
Image: Bigstock
Factors Setting the Tone for Allstate's (ALL) Q4 Earnings
The Allstate Corporation (ALL - Free Report) is scheduled to release fourth-quarter 2023 results on Feb 7, after the closing bell.
Q4 Estimates
The Zacks Consensus Estimate for Allstate’s fourth-quarter earnings per share (EPS) is pegged at $3.87. A loss of $1.36 per share was reported in the prior-year quarter.
The consensus mark for revenues is $15.1 billion, which indicates an improvement of 11.1% from the prior-year quarter’s reported figure.
Allstate’s bottom line beat estimates in three of the trailing four quarters and missed the mark once, the average surprise being 31.5%. This is depicted in the chart below:
The Allstate Corporation Price and EPS Surprise
The Allstate Corporation price-eps-surprise | The Allstate Corporation Quote
Before we get into what to expect for the to-be-reported quarter in detail, it is worth looking at ALL’s prior-quarter performance.
Q3 Earnings Rewind
In the last reported quarter, the company reported adjusted EPS of 81 cents per share, which outpaced the Zacks Consensus Estimate by a whopping 107.7%. The quarterly results benefited on the back of continued rate hikes, strong underwriting results and sound contribution from the Protection Services unit. However, the upside was partly offset by the continued incidence of auto insurance loss costs, a significant increase in catastrophe losses and an elevated expense level.
Now, let’s see how things have shaped up prior to the fourth-quarter earnings announcement.
Factors to Note
Allstate’s revenues are likely to have benefited on the back of improved net premiums earned, attributable to rate increases. We estimate net premiums earned to grow 12.2% year over year to $13.3 billion in the fourth quarter. Net investment income is anticipated to have received an impetus from higher fixed income yields and increased duration of bonds.
Strong segmental contributions are also expected to have driven ALL’s quarterly performance. The Property-Liability segment is likely to have been aided by higher earned premiums, which, in turn, are likely to have stemmed from rate increases in the auto and homeowners insurance business. Our estimate for the unit’s premiums earned is $12.7 billion, which indicates an improvement of 11.3% year over year.
The auto insurance business is expected to have been aided by expanding earned premiums, lower expenses and reduced adverse non-catastrophe prior-year reserve re-estimates in the fourth quarter. Although the elevated loss cost trend continues to persist, continued execution of rate increases should have resulted in improved performance of this segment.
Meanwhile, the homeowners’ insurance business is likely to have received a boost from improved average gross premium per policy in the Allstate and National General brands coupled with a rise in policies in force. However, the continued incidence of catastrophe losses is expected to have acted as a partial offset for both the business’ quarterly performance.
Inevitably, catastrophe losses are likely to have hurt the overall underwriting results of Allstate in the to-be-reported quarter and led to a deterioration in the combined ratio.
The Protection Services segment is expected to have been aided by the strength of Allstate Protection Plans and Allstate Dealer Services coupled with expanding international operations. We expect the unit’s revenues to rise 25.4% year over year to $811 million. However, the upside is likely to have been partly offset by a higher share of lower-margin business and higher severity of claims.
Additionally, improved premiums and contract charges, as well as higher revenues derived from group health products, are likely to have contributed to the performance of the Allstate Health and Benefits segment in the to-be-reported quarter. However, the upside is likely to have been partly offset by a decline in individual health and employer voluntary benefits and, escalating expenses linked with system investments. Our estimate for the unit’s revenues is $574.6 million, up 2.6% year over year.
What Our Quantitative Model Predicts
Our proven model does not conclusively predict an earnings beat for Allstate this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. However, that’s not the case here, as you see below.
Earnings ESP: Allstate has an Earnings ESP of 0.00%. The Most Accurate Estimate is pegged at $3.87, in line with the Zacks Consensus Estimate. You can uncover the best stocks before they’re reported with our Earnings ESP Filter.
Zacks Rank: ALL currently carries a Zacks Rank of 3.
Stocks to Consider
Here are some other companies from the insurance space, which according to our model, have the right combination of elements to beat on earnings this time around:
Primerica, Inc. (PRI - Free Report) currently has an Earnings ESP of +0.44% and a Zacks Rank of 2, at present.You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for PRI’s fourth-quarter 2023 earnings is pegged at $4.26 per share, indicating an improvement of 22.1% from the prior-year quarter’s reported number.
Primerica’s earnings beat estimates in each of the trailing four quarters, the average surprise being 7.8%.
Everest Group, Ltd. (EG - Free Report) has an Earnings ESP of +1.18% and a Zacks Rank of 3, at present. The Zacks Consensus Estimate for EG’s fourth-quarter 2023 earnings is pegged at $14.63 per share, suggesting 19.8% growth from the year-ago quarter’s reported figure.
Everest Group’s earnings beat estimates in three of the trailing four quarters and missed the mark once, the average surprise being 24.50%.
Willis Towers Watson Public Limited Company (WTW - Free Report) has an Earnings ESP of +0.23% and a Zacks Rank of 3, at present. The Zacks Consensus Estimate for WTW’s fourth-quarter 2023 earnings is pegged at $7.04 per share, which implies an 11.2% rise from the year-ago quarter’s reported figure.
The stock has witnessed two upward estimate revisions compared with no downward revisions for fourth-quarter earnings over the past 30 days.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.