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Why Is CNO (CNO) Up 6.6% Since Last Earnings Report?

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A month has gone by since the last earnings report for CNO Financial (CNO - Free Report) . Shares have added about 6.6% in that time frame, underperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is CNO due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.

CNO Financial's Q2 Earnings Beat Estimates, Fall Y/Y

CNO Financial’s second-quarter 2020 adjusted earnings per share of 43 cents beat the Zacks Consensus Estimate by 30.3%. However, the bottom line declined 10.4% year over year on account of fall in annuity collected premiums and lower margin in life insurance products, partly offset by reduced costs.

Nevertheless, the company’s total revenues improved 3.5% year over year to $1.01 billion due to higher insurance policy income, improved income from policyholder and other special-purpose portfolios, and increased fee revenue and other income. The top line also outpaced the consensus mark by 23.4%.

Quarterly Operational Update

Annuity collected premiums plunged 29% year over year to $242.7 million due to pricing discipline.

New annualized premiums for life and health products were $69.4 million, down 19% from the year-ago period.

Total insurance policy income inched up 1% year over year to $625.3 million.

Operating return on equity for the second quarter was 10.5%, contracting 40 basis points (bps) year over year.

Total benefits and expenses fell 2.5% year over year to $908.8 million, primarily on account of lower insurance policy benefits and interest expense.

Financial Update

Unrestricted cash and cash equivalents held by CNO Financial were $521.1 million as of Jun 30, 2020, down 10.2% from the level at 2019 end.
As of Jun 30, 2020, total assets were $34 billion, up 1% from the level at 2019 end.

Debt-to-capital was 17.3% as of Jun 30, 2020 compared with 17.5% at 2019 end.

Securities Repurchase and Divided Update

In the second quarter, the company returned $47.4 million in the form of share buybacks and dividends.
 

How Have Estimates Been Moving Since Then?

It turns out, estimates revision flatlined during the past month.

VGM Scores

At this time, CNO has a subpar Growth Score of D, however its Momentum Score is doing a bit better with a C. However, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

CNO has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.


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