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Can StanCorp Financial (SFG) Surprise Again?

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StanCorp Financial Group Inc. is set to report fourth-quarter and full year 2013 results on Jan 29. Last quarter, the company posted a 39.4% positive earnings surprise. Let’s see how things are shaping up for this announcement.

Growth Factors this Past Quarter

Continued solid performance at the company’s Asset Management segment driven by higher administrative fee revenues is expected to aid fourth-quarter results.

Moreover, pricing actions that the company undertook have started to bear fruit in the group insurance businesses.

With respect to returning value to shareholders, the board of directors of StanCorp approved an 18% increase in annual dividend during the quarter. StanCorp also envisions share buybacks between $40 million and $80 million in 2013, which is expected to boost its bottom line.

However, declining Group insurance premiums remains a concern. StanCorp expects group insurance premium to decrease in low single digits in 2013, exerting downward pressure on group insurance sales and persistency.

Earnings Whispers?

Our proven model does not conclusively show that StanCorp is likely to beat earnings this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 for this to happen. That is not the case here as you will see below.

Negative Zacks ESP:  That is because the Most Accurate estimate stands at $1.15 while the Zacks Consensus Estimate is higher at $1.18. That leads to a difference of -2.54%.

Zacks Rank #3: StanCorp Financial’s Zacks Rank #3 (Hold) when combined with a negative ESP makes surprise prediction difficult. We caution against stocks with Zacks Ranks #4 and 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing a negative estimate revisions momentum.

Other Stocks to Consider

Here are some other companies you may want to consider as our model shows they have the right combination of elements to post an earnings beat this quarter:  

Aspen Insurance Holdings Ltd. (AHL - Free Report) , earnings ESP of +3.57% and a Zacks Rank #1 (Strong Buy).

The Chubb Corporation (CB - Free Report) , earnings ESP of +0.49% and a Zacks Rank #1.

Lincoln National Corporation (LNC - Free Report) , earnings ESP of +0.79% and a Zacks Rank #2 (Buy).

In-Depth Zacks Research for the Tickers Above

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Chubb Limited (CB) - free report >>

Lincoln National Corporation (LNC) - free report >>

Aspen Insurance Holdings Limited (AHL) - free report >>

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