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On January 12, Zacks Investment Research upgraded Allstate Corp. (ALL - Analyst Report) to a Zacks Rank #1 (Strong Buy).
Why the Upgrade?
Allstate has been witnessing rising earnings estimates on the back of a new $1 billion share repurchase authorization and solid scores from credit rating agencies. Moreover, this property & casualty insurer delivered positive earnings surprises in all the 4 quarters with an average beat of 44.6%. The expected long-term earnings growth rate for this stock is 8.9%.
The Zacks Consensus Estimate for 2013 is $4.51 per share, up 0.2% as 3 of the 26 estimates were revised higher over the last 30 days.
Based on the solid performance in the first three quarters, the Zacks Consensus Estimate for 2012 is $3.17 per share, up nearly 181% year over year. However, $1.08 billion cat loss, pre-tax and net of reinsurance due to Hurricane Sandy will weigh on the fourth-quarter results. The Zacks Consensus Estimate for the fourth quarter is a loss of 7 cents per share, a decline of 105% year over year.
Allstate reported its third-quarter results on October 31. Non-GAAP earnings per share were $1.46, which surpassed the Zacks Consensus Estimate by 27%. Additionally, it was significantly ahead of the year-ago earnings of 16 cents.
The upside reflected lower catastrophe losses, which further led to reduced claims expenses coupled with higher premiums. Expansions in the emerging businesses and other personal lines along with higher investment income also benefited the results.
Other Stocks to Consider
Apart from Allstate, other stocks in the property and casualty insurers segment that are currently performing well and are worth considering include Cincinnati Financial Corp. (CINF - Analyst Report) and HCC Insurance Holdings Inc. (HCC - Snapshot Report). Both the companies carry a Zacks Rank #1 (Strong Buy).
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