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What's in the Cards for Allstate (ALL) in Q3 Earnings?
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Allstate Corp.’s (ALL - Free Report) third-quarter earnings will be reported on Oct 31. The company is expected to witness an increase in insurance premium written in its property and casualty business, higher revenues from its service business, partly offset by loss caused by catastrophe.
The company is expected to incur $625 million loss in the third quarter as a result of weather-related events that occurred in July, August and September.
Factors Affecting Q3 Results
Property and Liability Segment: It contributed 87% of the company’s consolidated revenues in the first half of this year and saw 1.9% growth. This segment has sub-segments that are Allstate Brand Auto, Allstate Homeowners, Allstate Other personal lines, Encompass, and Ensurance. Among these sub-segments, we expect to witness growth in auto, homeowners, personal lines as well as Ensurance due to increase in average premium and policy growth. Policies in force must have grown from new issued applications.
Nevertheless, in the past two years, net premium has been declining at Encompass. Decline in premium and policies in force in states, with inadequate returns, should weigh on premium growth. The segment’s business became smaller as it exited unprofitable markets and raised prices. This will likely dent revenues from the segment. Further, we do not expect the segment to witness premium growth in the third quarter.
Service Business: This segment contributed nearly 3% of revenues in the first half of the year and grew 25% year over year. In the to-be-reported quarter, growth should have been driven by increase in policies in force at its SquareTrade unit. The unit was acquired by the company in 2017.
Moreover, the company’s business segments Allstate Life, Allstate Benefits, and Allstate Annuities comprised nearly 5%, 3% and 3% of total revenues in the first half of 2018. While Allstate Life is likely to gain from growth in traditional life insurance sales and lower reinsurance premium ceded, Allstate Benefits is anticipated to gain from increased premiums and improved benefit ratios on some products.
Although investments made in marketing, distribution, telematics, and new products and technology increased business efficiency, it will lead to an increase in operating costs.
Investment income is likely to increase, led by strong results recorded from the performance-based portfolio.
The company’s disciplined capital management, which must have used capital to buy back shares, should aid its bottom line.
Earnings Surprise History
The company boasts an attractive earnings surprise history, having surpassed estimates in each of the trailing four quarters, with an average positive surprise of 41.84%. 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 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here as you will see below.
Earnings ESP: Allstate has an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Though Allstate currently carries a Zacks Rank #3, its 0.00% ESP makes surprise prediction difficult.
We caution against stocks with a Zacks Rank #4 or 5 (Sell-rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks That Warrant a Look
Here are some companies that you may consider as our model shows that these have the right combination of elements to post an earnings beat this quarter:
American Financial Group, Inc. (AFG - Free Report) is expected to report third-quarter 2018 results on Oct 30. The company has an Earnings ESP of +4.92% and a Zacks Rank #3.
Willis Towers Watson Public Limited Company has an Earnings ESP of +3.91% and a Zacks Rank of 3. The company is set to release third-quarter earnings on Nov 2.
CNA Financial (CNA - Free Report) has an Earnings ESP of +4.19% and a Zacks Rank #2. The company is expected to report third-quarter earnings results on Nov 5.
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
Image: Bigstock
What's in the Cards for Allstate (ALL) in Q3 Earnings?
Allstate Corp.’s (ALL - Free Report) third-quarter earnings will be reported on Oct 31. The company is expected to witness an increase in insurance premium written in its property and casualty business, higher revenues from its service business, partly offset by loss caused by catastrophe.
The company is expected to incur $625 million loss in the third quarter as a result of weather-related events that occurred in July, August and September.
Factors Affecting Q3 Results
Property and Liability Segment: It contributed 87% of the company’s consolidated revenues in the first half of this year and saw 1.9% growth. This segment has sub-segments that are Allstate Brand Auto, Allstate Homeowners, Allstate Other personal lines, Encompass, and Ensurance. Among these sub-segments, we expect to witness growth in auto, homeowners, personal lines as well as Ensurance due to increase in average premium and policy growth. Policies in force must have grown from new issued applications.
Nevertheless, in the past two years, net premium has been declining at Encompass. Decline in premium and policies in force in states, with inadequate returns, should weigh on premium growth. The segment’s business became smaller as it exited unprofitable markets and raised prices. This will likely dent revenues from the segment. Further, we do not expect the segment to witness premium growth in the third quarter.
Service Business: This segment contributed nearly 3% of revenues in the first half of the year and grew 25% year over year. In the to-be-reported quarter, growth should have been driven by increase in policies in force at its SquareTrade unit. The unit was acquired by the company in 2017.
Moreover, the company’s business segments Allstate Life, Allstate Benefits, and Allstate Annuities comprised nearly 5%, 3% and 3% of total revenues in the first half of 2018. While Allstate Life is likely to gain from growth in traditional life insurance sales and lower reinsurance premium ceded, Allstate Benefits is anticipated to gain from increased premiums and improved benefit ratios on some products.
Although investments made in marketing, distribution, telematics, and new products and technology increased business efficiency, it will lead to an increase in operating costs.
Investment income is likely to increase, led by strong results recorded from the performance-based portfolio.
The company’s disciplined capital management, which must have used capital to buy back shares, should aid its bottom line.
Earnings Surprise History
The company boasts an attractive earnings surprise history, having surpassed estimates in each of the trailing four quarters, with an average positive surprise of 41.84%. This is depicted in the chart below:
The Allstate Corporation Price and EPS Surprise
The Allstate Corporation Price and EPS Surprise | The Allstate Corporation Quote
Here’s What Our Quantitative Model Predicts
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 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here as you will see below.
Earnings ESP: Allstate has an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Though Allstate currently carries a Zacks Rank #3, its 0.00% ESP makes surprise prediction difficult.
We caution against stocks with a Zacks Rank #4 or 5 (Sell-rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks That Warrant a Look
Here are some companies that you may consider as our model shows that these have the right combination of elements to post an earnings beat this quarter:
American Financial Group, Inc. (AFG - Free Report) is expected to report third-quarter 2018 results on Oct 30. The company has an Earnings ESP of +4.92% and a Zacks Rank #3.
You can see the complete list of today’s Zacks #1 Rank stocks here.
Willis Towers Watson Public Limited Company has an Earnings ESP of +3.91% and a Zacks Rank of 3. The company is set to release third-quarter earnings on Nov 2.
CNA Financial (CNA - Free Report) has an Earnings ESP of +4.19% and a Zacks Rank #2. The company is expected to report third-quarter earnings results on Nov 5.
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
See Zacks' 3 Best Stocks to Play This Trend >>