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Loews Corporation (L)

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Loews Corporation (L) second quarter earnings substantially missed the Zacks Consensus Estimate and year-ago results. Lower earnings at Diamond Offshore and soft results from equity and limited partnership investments at the parent company weighed on the results, but higher earnings at CNA Financial Corporation and Boardwalk Pipeline Partners, LP were the positives.

Loews aims to strengthen its hotel business by doubling its hotel count within the next three to five years, and expects to triple the net income within the next three years. Elsewhere, Diamond Offshore continues to work on improving its fleet. Boardwalk's increased capacity and expansion projects, strong balance sheet with low leverage and adequate cash also bodes well.

The company also remains focused on enhancing its shareholders value through share buybacks. We retain our Outperform recommendation on Loews. Our six-month target price of $47.00 per share equates to about 15.2x our 2012 earnings estimate. This price target, along with the annual dividend of $0.25 per share, implies an expected total return of 19.2%.

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