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Insurance Stock Q4 Earnings Due on Feb 8: PRU, CINF, VOYA
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The Q4 earnings season is well underway with nearly 55% members of the elite S&P 500 Index having reported quarterly results so far. According to the latest Earnings Preview, the performance of the 275 index members that have already reported their financial numbers this quarter indicate that total earnings increased 6.9% due to 4.2% higher revenues. The beat ratio is strong with 68% companies surpassing bottom-line expectations and 54.5% outperforming on the top-line front.
The Finance sector (one of the 16 Zacks sectors) has started the Q4 earnings season on a strong note. In fact, the financial performance of 72.2% companies from this sector that have revealed their quarterly results shows 12.1% earnings growth due to 4.7% increase in revenues, both on a year-over-year basis. Moreover, the beat ratio of 70.8% for the bottom line and 55.4% for the top line is higher than the beat ratio of the S&P 500.
The Finance sector is highly diversified and includes several industries like insurance, banks and securities exchanges to name a few.
The insurance industry was severely affected by catastrophe losses in 2016 compared with benign cat activity in 2015. It was also hit by Hurricane Matthew in Q4. In fact, the industry is likely to have incurred loss of $3 billion to $9 billion in in the quarter owing to the severity of the hurricane. The quarter also bore the brunt of an earthquake in New Zealand and other catastrophe events. These are expected to have weighed on the underwriting results of insurers, hurting their underwriting income and combined ratio. However, prudent underwriting practices should bring some respite.
Though the Fed raised the interest rate, it was toward the end of Q4. Insurers, therefore, are unlikely to have benefited from the rate hike.
Nonetheless, the broader invested asset base and alternative asset classes are positives. Also, spread compression on products like fixed annuities and universal life is likely to have improved.
To sum up, core business growth, geographic expansion and strategic acquisitions, an improving employment scenario and better payroll should prove beneficial for insurance companies in Q4.
With a number of companies likely to report Q4 results soon, we expect to get a clearer idea of the trends this earnings cycle. Let’s find out how these three insurers might perform when they come up with their quarterly numbers on Feb 8.
Prudential Financial Inc. (PRU - Free Report) offers several financial products and services like life insurance, annuities, retirement-related services, mutual funds, investment management and real estate services. Better performance by the pension risk transfer business, supported by its sturdy position and deeper penetration, is expected to have driven results at the retirement business. The Asset Management business, on the other hand, is likely have benefitted from strong net inflows. However, higher expenses are likely to have been a dampener.
In the last reported quarter, Prudential beat the Zacks Consensus Estimate by 6.40%. Though the company has a favorable Zacks Rank #2 (Buy), its Earnings ESP of 0.00% makes surprise prediction difficult. Both the Most Accurate Estimate and the Zacks Consensus Estimate stands at $2.31 per share. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
According to our proven model a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 or at least 3 (Hold) for an earnings beat.
With respect to the surprise trend, Prudential missed expectations in three of the last four quarters with an average negative surprise of 10.66%. (Read more: Prudential Financial Q4 Earnings: What's in Store?)
Cincinnati Financial Corporation (CINF - Free Report) markets property and casualty insurance as its main business.
The company’s top line is expected to have been boosted by several growth initiatives as well as gradual improvement in insurance rates. Moreover, the company is likely to report premium growth for each of its insurance segments owing to better pricing. Investment income is likely to have improved due to increase in both interest and dividend income. However, pre-tax catastrophe loss between $75 million and $85 million was a dampener. This is likely to result in a deterioration of the combined ratio by 650–750 basis points (bps).
In the last-reported quarter, Cincinnati Financial missed the Zacks Consensus Estimate by 1.18%. Though the company has a favorable Zacks Rank #1, its Earnings ESP of 0.00% makes surprise prediction difficult. Both the Most Accurate Estimate and the Zacks Consensus Estimate stand at 68 cents per share.
Voya Financial, Inc. (VOYA - Free Report) operates as a retirement, investment, and insurance company in the United States.
In the last reported quarter, Voya Financial missed the Zacks Consensus Estimate by 54.32%. Though the company has a favorable Zacks Rank #3, an Earnings ESP of -1.27% makes surprise prediction difficult. While the Most Accurate Estimate stands at 78 cents, the Zacks Consensus Estimate is pegged higher at 79 cents per share.
With respect to the surprise trend, Voya Financial missed expectations in two of the last four quarters with an average negative surprise of 15.42%.
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Insurance Stock Q4 Earnings Due on Feb 8: PRU, CINF, VOYA
The Q4 earnings season is well underway with nearly 55% members of the elite S&P 500 Index having reported quarterly results so far. According to the latest Earnings Preview, the performance of the 275 index members that have already reported their financial numbers this quarter indicate that total earnings increased 6.9% due to 4.2% higher revenues. The beat ratio is strong with 68% companies surpassing bottom-line expectations and 54.5% outperforming on the top-line front.
The Finance sector (one of the 16 Zacks sectors) has started the Q4 earnings season on a strong note. In fact, the financial performance of 72.2% companies from this sector that have revealed their quarterly results shows 12.1% earnings growth due to 4.7% increase in revenues, both on a year-over-year basis. Moreover, the beat ratio of 70.8% for the bottom line and 55.4% for the top line is higher than the beat ratio of the S&P 500.
The Finance sector is highly diversified and includes several industries like insurance, banks and securities exchanges to name a few.
The insurance industry was severely affected by catastrophe losses in 2016 compared with benign cat activity in 2015. It was also hit by Hurricane Matthew in Q4. In fact, the industry is likely to have incurred loss of $3 billion to $9 billion in in the quarter owing to the severity of the hurricane. The quarter also bore the brunt of an earthquake in New Zealand and other catastrophe events. These are expected to have weighed on the underwriting results of insurers, hurting their underwriting income and combined ratio. However, prudent underwriting practices should bring some respite.
Though the Fed raised the interest rate, it was toward the end of Q4. Insurers, therefore, are unlikely to have benefited from the rate hike.
Nonetheless, the broader invested asset base and alternative asset classes are positives. Also, spread compression on products like fixed annuities and universal life is likely to have improved.
To sum up, core business growth, geographic expansion and strategic acquisitions, an improving employment scenario and better payroll should prove beneficial for insurance companies in Q4.
With a number of companies likely to report Q4 results soon, we expect to get a clearer idea of the trends this earnings cycle. Let’s find out how these three insurers might perform when they come up with their quarterly numbers on Feb 8.
Prudential Financial Inc. (PRU - Free Report) offers several financial products and services like life insurance, annuities, retirement-related services, mutual funds, investment management and real estate services. Better performance by the pension risk transfer business, supported by its sturdy position and deeper penetration, is expected to have driven results at the retirement business. The Asset Management business, on the other hand, is likely have benefitted from strong net inflows. However, higher expenses are likely to have been a dampener.
In the last reported quarter, Prudential beat the Zacks Consensus Estimate by 6.40%. Though the company has a favorable Zacks Rank #2 (Buy), its Earnings ESP of 0.00% makes surprise prediction difficult. Both the Most Accurate Estimate and the Zacks Consensus Estimate stands at $2.31 per share. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
According to our proven model a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 or at least 3 (Hold) for an earnings beat.
With respect to the surprise trend, Prudential missed expectations in three of the last four quarters with an average negative surprise of 10.66%. (Read more: Prudential Financial Q4 Earnings: What's in Store?)
Prudential Financial, Inc. Price and EPS Surprise
Prudential Financial, Inc. Price and EPS Surprise | Prudential Financial, Inc. Quote
Cincinnati Financial Corporation (CINF - Free Report) markets property and casualty insurance as its main business.
The company’s top line is expected to have been boosted by several growth initiatives as well as gradual improvement in insurance rates. Moreover, the company is likely to report premium growth for each of its insurance segments owing to better pricing. Investment income is likely to have improved due to increase in both interest and dividend income. However, pre-tax catastrophe loss between $75 million and $85 million was a dampener. This is likely to result in a deterioration of the combined ratio by 650–750 basis points (bps).
In the last-reported quarter, Cincinnati Financial missed the Zacks Consensus Estimate by 1.18%. Though the company has a favorable Zacks Rank #1, its Earnings ESP of 0.00% makes surprise prediction difficult. Both the Most Accurate Estimate and the Zacks Consensus Estimate stand at 68 cents per share.
With respect to the surprise trend, Cincinnati Financial surpassed expectations in the last four quarters with an average surprise of 11.82%. (Read more: Cincinnati Financial: What's Up this Earnings Season?)
Cincinnati Financial Corporation Price and EPS Surprise
Cincinnati Financial Corporation Price and EPS Surprise | Cincinnati Financial Corporation Quote
Voya Financial, Inc. (VOYA - Free Report) operates as a retirement, investment, and insurance company in the United States.
In the last reported quarter, Voya Financial missed the Zacks Consensus Estimate by 54.32%. Though the company has a favorable Zacks Rank #3, an Earnings ESP of -1.27% makes surprise prediction difficult. While the Most Accurate Estimate stands at 78 cents, the Zacks Consensus Estimate is pegged higher at 79 cents per share.
With respect to the surprise trend, Voya Financial missed expectations in two of the last four quarters with an average negative surprise of 15.42%.
Voya Financial, Inc. Price and EPS Surprise
Voya Financial, Inc. Price and EPS Surprise | Voya Financial, Inc. Quote
You can see the complete list of today’s Zacks Rank #1 (Strong Buy) stocks here.
Just Released – Driverless Cars: Your Roadmap to Mega-Profits Today
In this latest Special Report, Zacks’ Aggressive Growth Strategist Brian Bolan explores a full-blown technological breakthrough in the making – autonomous cars. He also spotlights 8 stocks with tremendous gain potential to feed off this phenomenon. Click to see the stocks right now >>