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Will Cat Loss Ail Cincinnati Financial's (CINF) Q3 Earnings?
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Cincinnati Financial Corporation (CINF - Free Report) is slated to report third-quarter 2018 results on Oct 25 after the market closes. Last reported quarter, the company delivered a positive earnings surprise of 50%.
Let’s see, how things are shaping up for this announcement.
Cincinnati Financial has likely witnessed premium growth in the to-be-reported quarter owing to several premium growth initiatives undertaken by the company, price increases as well as probable higher premiums across its business lines. Additionally, a better-than-expected performance at Cincinnati Re, which also forms a substantial contributor to the company’s earnings, might have led to this probable premium growth.
Further, the company’s reliance on its agent-focused business model has possibly boosted premium growth in the third quarter, thus driving the insurer’s overall performance.
Riding on the strength of a better interest rate environment along with higher interest and dividend income, the company will probably report stronger investment results in the to-be-reported quarter.
Moreover, the property and casualty (P&C) insurer is likely to report top-line increase in the soon-to-be-reported quarter on the back of anticipated higher premiums earned as well as investment income. This apart, a gradual improvement in insurance rates and several growth initiatives are estimated to have contributed to this possible upside. The Zacks Consensus Estimate for revenues is pegged at $1.5 billion, representing a 5.9% rise from the prior-year period.
Lower tax incidence and consistent share repurchases are have likely supported the P&C insurer’s bottom line in the third quarter. The consensus estimate for the metric stands at 76 cents per share, up 31% year over year.
Cincinnati Financial as a property and casualty (P&C) insurer has been exposed to unpredictable weather-related events and a considerable catastrophe loss. The company has provided preliminary loss estimates that might impact the insurer’s results. The insurer is projected to incur pre-tax catastrophe loss of about $120 million, indicating an impact on the third-quarter combined ratio of around 950-1000 basis points (bps) based on the projected P&C earned premiums.
With respect to P&C combined ratio, the company predicts the metric to range between 96% and 98% in the third quarter including the effect of catastrophe loss. Hence, the company’s underwriting results might be hampered in the yet-to-be-reported period.
Further, the company has likely reported an increase in total benefits and expenses, mainly due to higher insurance loss and contract holders’ benefits, underwriting, acquisition as well as insurance expenses. This in turn, might limit the insurer’s operating margin expansion.
What Our Quantitative Model States
Our proven model does not conclusively show that Cincinnati Financial is likely to beat on earnings this reporting season. This is because a stock needs to have both a positive Earnings ESP and a favorable Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. But that is not the case here as you will see below.
Earnings ESP: Cincinnati Financial has an Earnings ESP of -1.54%. This is because the Most Accurate Estimate is pegged at 75 cents per share, lower than the Zacks Consensus Estimate of 76 cents per share. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.
Cincinnati Financial Corporation Price and EPS Surprise
Zacks Rank: Cincinnati Financial sports a Zacks Rank of 1, which increases the predictive power of ESP. However, the company needs to have a positive ESP to be confident about a likely earnings surprise. Therefore, this combination leaves surprise prediction inconclusive.
We caution against the Sell-rated stocks (#4 or 5) going into an earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks to Consider
Some stocks worth considering from the insurance industry with the right combination of elements to surpass estimates this time around are as follows:
Voya Financial, Inc. (VOYA - Free Report) has an Earnings ESP of +0.93% and a Zacks Rank #2. The company is set to announce third-quarter earnings on Oct 30.
Willis Towers Watson Public Limited Company has an Earnings ESP of +2.40% and a Zacks Rank of 3. The company is set to release third-quarter earnings on Nov 2.
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Will Cat Loss Ail Cincinnati Financial's (CINF) Q3 Earnings?
Cincinnati Financial Corporation (CINF - Free Report) is slated to report third-quarter 2018 results on Oct 25 after the market closes. Last reported quarter, the company delivered a positive earnings surprise of 50%.
Let’s see, how things are shaping up for this announcement.
Cincinnati Financial has likely witnessed premium growth in the to-be-reported quarter owing to several premium growth initiatives undertaken by the company, price increases as well as probable higher premiums across its business lines. Additionally, a better-than-expected performance at Cincinnati Re, which also forms a substantial contributor to the company’s earnings, might have led to this probable premium growth.
Further, the company’s reliance on its agent-focused business model has possibly boosted premium growth in the third quarter, thus driving the insurer’s overall performance.
Riding on the strength of a better interest rate environment along with higher interest and dividend income, the company will probably report stronger investment results in the to-be-reported quarter.
Moreover, the property and casualty (P&C) insurer is likely to report top-line increase in the soon-to-be-reported quarter on the back of anticipated higher premiums earned as well as investment income. This apart, a gradual improvement in insurance rates and several growth initiatives are estimated to have contributed to this possible upside. The Zacks Consensus Estimate for revenues is pegged at $1.5 billion, representing a 5.9% rise from the prior-year period.
Lower tax incidence and consistent share repurchases are have likely supported the P&C insurer’s bottom line in the third quarter. The consensus estimate for the metric stands at 76 cents per share, up 31% year over year.
Cincinnati Financial as a property and casualty (P&C) insurer has been exposed to unpredictable weather-related events and a considerable catastrophe loss. The company has provided preliminary loss estimates that might impact the insurer’s results. The insurer is projected to incur pre-tax catastrophe loss of about $120 million, indicating an impact on the third-quarter combined ratio of around 950-1000 basis points (bps) based on the projected P&C earned premiums.
With respect to P&C combined ratio, the company predicts the metric to range between 96% and 98% in the third quarter including the effect of catastrophe loss. Hence, the company’s underwriting results might be hampered in the yet-to-be-reported period.
Further, the company has likely reported an increase in total benefits and expenses, mainly due to higher insurance loss and contract holders’ benefits, underwriting, acquisition as well as insurance expenses. This in turn, might limit the insurer’s operating margin expansion.
What Our Quantitative Model States
Our proven model does not conclusively show that Cincinnati Financial is likely to beat on earnings this reporting season. This is because a stock needs to have both a positive Earnings ESP and a favorable Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. But that is not the case here as you will see below.
Earnings ESP: Cincinnati Financial has an Earnings ESP of -1.54%. This is because the Most Accurate Estimate is pegged at 75 cents per share, lower than the Zacks Consensus Estimate of 76 cents per share. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.
Cincinnati Financial Corporation Price and EPS Surprise
Cincinnati Financial Corporation Price and EPS Surprise | Cincinnati Financial Corporation Quote
Zacks Rank: Cincinnati Financial sports a Zacks Rank of 1, which increases the predictive power of ESP. However, the company needs to have a positive ESP to be confident about a likely earnings surprise. Therefore, this combination leaves surprise prediction inconclusive.
We caution against the Sell-rated stocks (#4 or 5) going into an earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks to Consider
Some stocks worth considering from the insurance industry with the right combination of elements to surpass estimates this time around are as follows:
Everest Re Group, Ltd. is set to report third-quarter earnings on Oct 29 and has an Earnings ESP of +16.13%. The company has a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.
Voya Financial, Inc. (VOYA - Free Report) has an Earnings ESP of +0.93% and a Zacks Rank #2. The company is set to announce third-quarter earnings on Oct 30.
Willis Towers Watson Public Limited Company has an Earnings ESP of +2.40% and a Zacks Rank of 3. The company is set to release third-quarter earnings on Nov 2.
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
See the pot trades we're targeting>>