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Cincinnati Financial (CINF): What's Up this Earnings Season?
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Cincinnati Financial Corp. (CINF - Free Report) is set to report second-quarter 2016 results on Jul 26, after the market closes. Last quarter, the company posted a positive earnings surprise of 15.58%. Let’s see how things are shaping up for this announcement.
Factors to be Considered this Quarter
Cincinnati Financial is likely to witness top-line growth at its Commercial Lines Property Casualty Insurance segment in the to-be-reported quarter. Several growth initiatives as well as a gradual increase in insurance rates are likely to drive the increase in revenues.
The company’s Excess and Surplus line has likely performed well in the second quarter and is expected to generate higher underwriting income.
Further, the company’s reinsurance unit – Cincinnati Re – has likely made underwriting profit in the quarter to be reported. Moreover, the company is expected to experience premium growth owing to quality new business from local independent agencies.
However, the Cincinnati Financial’s estimated catastrophe loss is anticipated to have a negative impact on its earnings. Notably, the company has projected pre-tax catastrophe loss between $160 million and $170 million, due to hailstorms in Texas. This loss will deteriorate combined ratio by 1440 – 1530 basis points.
Further, the company expects combined ratio in the second quarter to be between 98% and 101%.
Also, the company’s life insurance segment might be adversely affected by the persistent volatility in group benefits associated with the Affordable Care Act (ACA).
With respect to surprise trend, the company delivered a positive earnings surprise in all of the last four quarters with an average beat of 51.40%.
Our proven model does not conclusively show that Cincinnati Financial is likely to beat on earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here as you will see below.
Zacks ESP: Cincinnati Financial has an Earnings ESP of 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate stand at a loss of 52 cents.
Zacks Rank: Cincinnati Financial holds a Zacks Rank #2, which increases the predictive power of ESP. However, an ESP of 0.00% makes surprise prediction difficult.
We caution against Sell-rated stocks (Zacks Rank #4 or 5) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks to Consider
Here are some companies from the insurance industry that you may want to consider as these have the right combination of elements to post an earnings beat this quarter:
W.R. Berkley Corporation (WRB - Free Report) has an Earnings ESP of +1.27% and a Zacks Rank #3. The company is slated to report second-quarter earnings on Jul 25.
The Allstate Corporation (ALL - Free Report) has an Earnings ESP of +1.89% and a Zacks Rank #3. The company is set to report second-quarter earnings on Aug 3.
Manulife Financial Corporation (MFC - Free Report) has an Earnings ESP of +2.94% and a Zacks Rank #3. The company is expected to report second-quarter earnings on Aug 4.
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Cincinnati Financial (CINF): What's Up this Earnings Season?
Cincinnati Financial Corp. (CINF - Free Report) is set to report second-quarter 2016 results on Jul 26, after the market closes. Last quarter, the company posted a positive earnings surprise of 15.58%. Let’s see how things are shaping up for this announcement.
Factors to be Considered this Quarter
Cincinnati Financial is likely to witness top-line growth at its Commercial Lines Property Casualty Insurance segment in the to-be-reported quarter. Several growth initiatives as well as a gradual increase in insurance rates are likely to drive the increase in revenues.
The company’s Excess and Surplus line has likely performed well in the second quarter and is expected to generate higher underwriting income.
Further, the company’s reinsurance unit – Cincinnati Re – has likely made underwriting profit in the quarter to be reported. Moreover, the company is expected to experience premium growth owing to quality new business from local independent agencies.
However, the Cincinnati Financial’s estimated catastrophe loss is anticipated to have a negative impact on its earnings. Notably, the company has projected pre-tax catastrophe loss between $160 million and $170 million, due to hailstorms in Texas. This loss will deteriorate combined ratio by 1440 – 1530 basis points.
Further, the company expects combined ratio in the second quarter to be between 98% and 101%.
Also, the company’s life insurance segment might be adversely affected by the persistent volatility in group benefits associated with the Affordable Care Act (ACA).
With respect to surprise trend, the company delivered a positive earnings surprise in all of the last four quarters with an average beat of 51.40%.
CINCINNATI FINL Price and EPS Surprise
CINCINNATI FINL Price and EPS Surprise | CINCINNATI FINL Quote
Earnings Whispers
Our proven model does not conclusively show that Cincinnati Financial is likely to beat on earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here as you will see below.
Zacks ESP: Cincinnati Financial has an Earnings ESP of 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate stand at a loss of 52 cents.
Zacks Rank: Cincinnati Financial holds a Zacks Rank #2, which increases the predictive power of ESP. However, an ESP of 0.00% makes surprise prediction difficult.
We caution against Sell-rated stocks (Zacks Rank #4 or 5) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks to Consider
Here are some companies from the insurance industry that you may want to consider as these have the right combination of elements to post an earnings beat this quarter:
W.R. Berkley Corporation (WRB - Free Report) has an Earnings ESP of +1.27% and a Zacks Rank #3. The company is slated to report second-quarter earnings on Jul 25.
The Allstate Corporation (ALL - Free Report) has an Earnings ESP of +1.89% and a Zacks Rank #3. The company is set to report second-quarter earnings on Aug 3.
Manulife Financial Corporation (MFC - Free Report) has an Earnings ESP of +2.94% and a Zacks Rank #3. The company is expected to report second-quarter earnings on Aug 4.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days.Click to get this free report >>