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Will Allstate (ALL) Growth Initiatives Aid Its Stock in 2021?
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The Allstate Corp. (ALL - Free Report) was able to tide over a tough operating landscape induced by an overall bleak economic situation in 2020 due to the COVID-19 outbreak by virtue of its diversified business, value-based product portfolio, strong underwriting discipline and a solid capital position.
Though the company’s share price has slipped 2.8% this year so far, it fared better than the industry’s decline of 3.2%.
Additionally, Allstate not only maintained its operating performance, its earnings also surpassed estimates in each of the three quarters of this year. Moreover, the company’s premiums written were up 3.4% year over year in the first nine months of 2020. It also saw a favorable impact from the decline in claims in its auto insurance business as fewer people drove their vehicles following the stay-at-home mandate.
Going forward, the company is likely to gain from its strategic growth initiatives. The practice of selling insurance online, providing support to call centers and building a new lower cost agent model are likely to increase business efficiency.
The company is also focusing on expanding its market share in Personal Property-Liability with its transformative growth plan, which has three components, namely expansion of customer access, improvement of customer value, which includes strengthening of its price position and product launches, and lastly, investment in marketing technology.
Allstate is working on strengthening its Auto insurance business through attractive pricing and effective cost management. It is growing its business Allstate Protection Plans to expand in the $35-billion consumer electronics and personal device protection market. It is also investing in Allstate Identity Protection to serve the nascent $4-billion (approx) personal identity protection market.
While working on high-growth areas, the company has also been reducing its Annuity business consistently over the last 15 years to manage risk-adjusted returns.
Moreover, cost reductions implemented by the company will enable it to further drive its competitive edge in auto insurance and fuel growth while reaping attractive returns.
Allstate is also seeking acquisition opportunities to tap inorganic growth. The pending buyout of National General is expected to be completed in the first quarter of 2021. The transaction will expand its access to the independent agent channel. The deal advances Allstate’s strategy to increase its market share in personal property-liability with the market share increasing 1%. The company will become a top-five personal lines carrier in the independent agent (IA) distribution channel. National General has a strong position in higher risk or “non-standard” auto insurance.
Therefore this acquisition will be accretive to Allstate’s earnings per share and ROE, reflecting significant cost synergies. The company expects a high-single digit earnings accretion in the first year post close.
These numerous initiatives bode well for the company in 2021. In addition, the recent weakness in stock price provides a good scope for investors to buy the dips.
Earnings of American Financial, Fidelity National and The Hanover Insurance surpassed estimates in the last reported quarter by 58.06%, 18.4% and 9.82%, respectively.
Zacks Names “Single Best Pick to Double”
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research SherazMian hand-picks one to have the most explosive upside of all.
You know this company from its past glory days, but few would expect that it’s poised for a monster turnaround. Fresh from a successful repositioning and flush with A-list celeb endorsements, it could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in a little more than 9 months and Nvidia which boomed +175.9% in one year.
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Will Allstate (ALL) Growth Initiatives Aid Its Stock in 2021?
The Allstate Corp. (ALL - Free Report) was able to tide over a tough operating landscape induced by an overall bleak economic situation in 2020 due to the COVID-19 outbreak by virtue of its diversified business, value-based product portfolio, strong underwriting discipline and a solid capital position.
Though the company’s share price has slipped 2.8% this year so far, it fared better than the industry’s decline of 3.2%.
Additionally, Allstate not only maintained its operating performance, its earnings also surpassed estimates in each of the three quarters of this year. Moreover, the company’s premiums written were up 3.4% year over year in the first nine months of 2020. It also saw a favorable impact from the decline in claims in its auto insurance business as fewer people drove their vehicles following the stay-at-home mandate.
Going forward, the company is likely to gain from its strategic growth initiatives. The practice of selling insurance online, providing support to call centers and building a new lower cost agent model are likely to increase business efficiency.
The company is also focusing on expanding its market share in Personal Property-Liability with its transformative growth plan, which has three components, namely expansion of customer access, improvement of customer value, which includes strengthening of its price position and product launches, and lastly, investment in marketing technology.
Allstate is working on strengthening its Auto insurance business through attractive pricing and effective cost management. It is growing its business Allstate Protection Plans to expand in the $35-billion consumer electronics and personal device protection market. It is also investing in Allstate Identity Protection to serve the nascent $4-billion (approx) personal identity protection market.
While working on high-growth areas, the company has also been reducing its Annuity business consistently over the last 15 years to manage risk-adjusted returns.
Moreover, cost reductions implemented by the company will enable it to further drive its competitive edge in auto insurance and fuel growth while reaping attractive returns.
Allstate is also seeking acquisition opportunities to tap inorganic growth. The pending buyout of National General is expected to be completed in the first quarter of 2021. The transaction will expand its access to the independent agent channel. The deal advances Allstate’s strategy to increase its market share in personal property-liability with the market share increasing 1%. The company will become a top-five personal lines carrier in the independent agent (IA) distribution channel. National General has a strong position in higher risk or “non-standard” auto insurance.
Therefore this acquisition will be accretive to Allstate’s earnings per share and ROE, reflecting significant cost synergies. The company expects a high-single digit earnings accretion in the first year post close.
These numerous initiatives bode well for the company in 2021. In addition, the recent weakness in stock price provides a good scope for investors to buy the dips.
The stock carries a Zacks Rank #2 (Buy), currently. Other stocks worth considering in the same space include American Financial Group Inc. (AFG - Free Report) , Fidelity National Financial, Inc. (FNF - Free Report) and The Hanover Insurance Group, Inc. (THG - Free Report) , each presently carrying the same Zacks Rank as Allstate.You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Earnings of American Financial, Fidelity National and The Hanover Insurance surpassed estimates in the last reported quarter by 58.06%, 18.4% and 9.82%, respectively.
Zacks Names “Single Best Pick to Double”
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research SherazMian hand-picks one to have the most explosive upside of all.
You know this company from its past glory days, but few would expect that it’s poised for a monster turnaround. Fresh from a successful repositioning and flush with A-list celeb endorsements, it could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in a little more than 9 months and Nvidia which boomed +175.9% in one year.
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