We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Will California Wild Fires Hurt Allstate (ALL) Q4 Earnings?
Read MoreHide Full Article
Property and casualty insurer Allstate Corp. (ALL - Free Report) is expected to release fourth-quarter earnings on Feb 7, after the market closes.
Let’s Take a Look at the Factors Influencing Q4 Results
Allstate expects to incur a loss of $516 million from the California wildfires. This, in turn, might dent the company’s underwriting results to some extent.
For the first nine months of 2017, this property and casualty insurer incurred $2.64 billion loss due to the catastrophe, up 16.1% year over year. Other players in the same industry, The Travelers Companies, Inc. (TRV - Free Report) incurred a loss of $499 million from the same calamity, while Chubb Ltd. (CB - Free Report) suffered a loss of $477 million.
We expect results to gain from a decline in the frequency of auto accidents and improved profitability in auto insurance, reflecting the profit improvement actions initiated in 2015.
Meanwhile, investments made for long-term growth in businesses such as Allstate Benefits, SquareTrade and its connected-car platform at Arity seem to be paying off, as evident from an increase in the company’s current policies and higher premiums. We expect the trend to continue in the to-be-reported quarter.
Also, the company is gradually gaining ground after suffering from declining income in its investment portfolio for the past many years due to market volatility and low interest rates. Net investment income rose 11% for the first nine months of 2017, reflecting higher performance-based results and stable income from market-based portfolios. We expect an increase in net investment income in the fourth quarter.
The bottom line will also get support from Allstate’s share buybacks.
Through the first nine months of 2017, the company repurchased 10 million shares or 2.7% of those outstanding at the beginning of the year. It further remains on track in executing the $2 billion share repurchase program that was approved in August 2017.
Earnings Surprise History
Allstate boasts an attractive earnings surprise history. It surpassed estimates in each of the trailing four quarters, with an average positive surprise of 56.9%. This is depicted in the chart below:
Our proven model does not conclusively show that Allstate is likely to beat on earnings this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank of #1, 2 or 3 for this to happen. That is not the case here as you will see below.
Zacks ESP: Allstate has an Earnings ESP of -8.28%. This is because the Most Accurate estimate of $1.44 per share is lower than the Zacks Consensus Estimate of $1.57. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Though Allstate carries a Zacks Rank #1 (Strong Buy), which increases the predictive power of ESP, its negative ESP makes surprise prediction difficult.
We caution against Sell-rated stocks (#4 or 5) going into an earnings announcement, especially when the company is seeing negative estimate revisions.
A Stock That Warrants a Look
Here is a stock that you may consider as our model shows that it has the right combination of elements to post an earnings beat this quarter:
It's hard to believe, even for us at Zacks. But while the market gained +18.8% from 2016 - Q1 2017, our top stock-picking screens have returned +157.0%, +128.0%, +97.8%, +94.7%, and +90.2% respectively.
And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - Q1 2017, the composite yearly average gain for these strategies has beaten the market more than 11X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation.
Image: Bigstock
Will California Wild Fires Hurt Allstate (ALL) Q4 Earnings?
Property and casualty insurer Allstate Corp. (ALL - Free Report) is expected to release fourth-quarter earnings on Feb 7, after the market closes.
Let’s Take a Look at the Factors Influencing Q4 Results
Allstate expects to incur a loss of $516 million from the California wildfires. This, in turn, might dent the company’s underwriting results to some extent.
For the first nine months of 2017, this property and casualty insurer incurred $2.64 billion loss due to the catastrophe, up 16.1% year over year. Other players in the same industry, The Travelers Companies, Inc. (TRV - Free Report) incurred a loss of $499 million from the same calamity, while Chubb Ltd. (CB - Free Report) suffered a loss of $477 million.
We expect results to gain from a decline in the frequency of auto accidents and improved profitability in auto insurance, reflecting the profit improvement actions initiated in 2015.
Meanwhile, investments made for long-term growth in businesses such as Allstate Benefits, SquareTrade and its connected-car platform at Arity seem to be paying off, as evident from an increase in the company’s current policies and higher premiums. We expect the trend to continue in the to-be-reported quarter.
Also, the company is gradually gaining ground after suffering from declining income in its investment portfolio for the past many years due to market volatility and low interest rates. Net investment income rose 11% for the first nine months of 2017, reflecting higher performance-based results and stable income from market-based portfolios. We expect an increase in net investment income in the fourth quarter.
The bottom line will also get support from Allstate’s share buybacks.
Through the first nine months of 2017, the company repurchased 10 million shares or 2.7% of those outstanding at the beginning of the year. It further remains on track in executing the $2 billion share repurchase program that was approved in August 2017.
Earnings Surprise History
Allstate boasts an attractive earnings surprise history. It surpassed estimates in each of the trailing four quarters, with an average positive surprise of 56.9%. This is depicted in the chart below:
Allstate Corporation (The) Price and EPS Surprise
Allstate Corporation (The) Price and EPS Surprise | Allstate Corporation (The) Quote
Earnings Whispers
Our proven model does not conclusively show that Allstate is likely to beat on earnings this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank of #1, 2 or 3 for this to happen. That is not the case here as you will see below.
Zacks ESP: Allstate has an Earnings ESP of -8.28%. This is because the Most Accurate estimate of $1.44 per share is lower than the Zacks Consensus Estimate of $1.57. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Though Allstate carries a Zacks Rank #1 (Strong Buy), which increases the predictive power of ESP, its negative ESP makes surprise prediction difficult.
We caution against Sell-rated stocks (#4 or 5) going into an earnings announcement, especially when the company is seeing negative estimate revisions.
A Stock That Warrants a Look
Here is a stock that you may consider as our model shows that it has the right combination of elements to post an earnings beat this quarter:
CNA Financial Corp. (CNA - Free Report) will report fourth-quarter 2017 earnings results on Feb 12. The company has an Earnings ESP of +2.75% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
Today's Stocks from Zacks' Hottest Strategies
It's hard to believe, even for us at Zacks. But while the market gained +18.8% from 2016 - Q1 2017, our top stock-picking screens have returned +157.0%, +128.0%, +97.8%, +94.7%, and +90.2% respectively.
And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - Q1 2017, the composite yearly average gain for these strategies has beaten the market more than 11X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation.
See Them Free>>