We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Will Increase in Premiums Aid Allstate (ALL) Earnings in Q4?
Read MoreHide Full Article
The Allstate Corp. (ALL - Free Report) is scheduled to report fourth-quarter earnings on Feb 3, after market close. The company’s earnings as well as revenues are expected to have risen from the respective year-ago reported figures.
In the last reported quarter, its bottom line of $2.94 per share beat the Zacks Consensus Estimate by 66.1% and also increased 3.5% year over year, led by improved premiums.
Q4 Earnings & Revenue Expectations
The Zacks Consensus Estimate for Allstate’s fourth-quarter earnings of $3.82 per share implies a 22.04% increase from the prior-year quarter’s reported number. Likewise, the consensus estimate for sales of $10.88 billion suggests a 1% rise from the year-ago quarter’s reported figure.
Factors to Impact Q4 Results
The company is likely to have borne pre-tax catastrophe losses of $345 million for the fourth quarter. These weather-related losses emanated from 10 events at an estimated amount of $324 million pretax ($256 million after tax). The rest of the loss is anticipated at $21 million pretax, in relation to the unfavorable prior-period reserve reestimates.
This catastrophe loss combined with expenses incurred for the company’s multi-year Transformative Growth Plan and low interest rates is likely to hurt the company fourth-quarter results.
The property and casualty insurer expects to incur a restructuring charge of approximately $50-$60 million pretax for the fourth quarter of 2020.
The company recently executed a cost-reduction plan to streamline its operations and processes across claims, sales, services and support functions to lower costs. The plan impacts approximately 3,800 employees , which will result in a charge of $290 million, with $198 million of that was recognized in the third quarter and the balance in future quarters. Part of this cost is likely to have been incurred in the fourth quarter.
Allstate’s property and liability business is likely to report an increase in premiums across Auto, Homeowners and other personal lines in the December-quarter results. The same is, however, partly offset by weak premiums in the commercial line business.
In Auto, growth in premiums written is likely to have slowed down due to lower increases in average premium from fewer approved rate changes and a decline in new issued applications, both related to the coronavirus. In the Homeowners line of business, premiums are likely to have increased, primarily on higher average premiums including both rate changes and inflation in the insured home valuations plus policy growth.
Allstate’s Service Businesses revenues are likely to have improved owing to higher policies in force, largely on growth in Allstate Protection Plans. The company successfully expanded its total addressable market with appliances, furniture, cellular carriers and fortified its foothold in the international markets with revenues in each of these areas. The combination of attractive unit economics, scalable technology platform and the power of The Allstate brand might have led to a continued profitable growth in protection plan business.
Share buybacks made by the company in the to-be-reported quarter are likely to have aided its bottom line.
Earnings Surprise History
Over the last four quarters, earnings of the company beat the Zacks Consensus Estimate on all occasions, the average being 38.59%. This is shown in the chart below:
Our proven model predicts an earnings beat for Allstate this time around. The combination of a positive Earnings ESPand a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of beating estimates, which is the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Earnings ESP: Allstate has an Earnings ESP of +5.72%.
Zacks Rank: Allstate currently has a Zacks Rank #3.
Other Stocks to Consider
Some other insurance stocks with the right combination of elements to come up with an earnings beat this reporting cycle are as follows:
Cincinnati Financial Corporation (CINF - Free Report) has an Earnings ESP of +2.72% and a Zacks Rank of 3, presently.
NMI Holdings Inc (NMIH - Free Report) has an Earnings ESP of +5.44% and is currently Zacks #3 Ranked.
The Hottest Tech Mega-Trend of All
Last year, it generated $24 billion in global revenues. By 2020, it's predicted to blast through the roof to $77.6 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
Image: Bigstock
Will Increase in Premiums Aid Allstate (ALL) Earnings in Q4?
The Allstate Corp. (ALL - Free Report) is scheduled to report fourth-quarter earnings on Feb 3, after market close. The company’s earnings as well as revenues are expected to have risen from the respective year-ago reported figures.
In the last reported quarter, its bottom line of $2.94 per share beat the Zacks Consensus Estimate by 66.1% and also increased 3.5% year over year, led by improved premiums.
Q4 Earnings & Revenue Expectations
The Zacks Consensus Estimate for Allstate’s fourth-quarter earnings of $3.82 per share implies a 22.04% increase from the prior-year quarter’s reported number. Likewise, the consensus estimate for sales of $10.88 billion suggests a 1% rise from the year-ago quarter’s reported figure.
Factors to Impact Q4 Results
The company is likely to have borne pre-tax catastrophe losses of $345 million for the fourth quarter. These weather-related losses emanated from 10 events at an estimated amount of $324 million pretax ($256 million after tax). The rest of the loss is anticipated at $21 million pretax, in relation to the unfavorable prior-period reserve reestimates.
This catastrophe loss combined with expenses incurred for the company’s multi-year Transformative Growth Plan and low interest rates is likely to hurt the company fourth-quarter results.
The property and casualty insurer expects to incur a restructuring charge of approximately $50-$60 million pretax for the fourth quarter of 2020.
The company recently executed a cost-reduction plan to streamline its operations and processes across claims, sales, services and support functions to lower costs. The plan impacts approximately 3,800 employees , which will result in a charge of $290 million, with $198 million of that was recognized in the third quarter and the balance in future quarters. Part of this cost is likely to have been incurred in the fourth quarter.
Allstate’s property and liability business is likely to report an increase in premiums across Auto, Homeowners and other personal lines in the December-quarter results. The same is, however, partly offset by weak premiums in the commercial line business.
In Auto, growth in premiums written is likely to have slowed down due to lower increases in average premium from fewer approved rate changes and a decline in new issued applications, both related to the coronavirus. In the Homeowners line of business, premiums are likely to have increased, primarily on higher average premiums including both rate changes and inflation in the insured home valuations plus policy growth.
Allstate’s Service Businesses revenues are likely to have improved owing to higher policies in force, largely on growth in Allstate Protection Plans. The company successfully expanded its total addressable market with appliances, furniture, cellular carriers and fortified its foothold in the international markets with revenues in each of these areas. The combination of attractive unit economics, scalable technology platform and the power of The Allstate brand might have led to a continued profitable growth in protection plan business.
Share buybacks made by the company in the to-be-reported quarter are likely to have aided its bottom line.
Earnings Surprise History
Over the last four quarters, earnings of the company beat the Zacks Consensus Estimate on all occasions, the average being 38.59%. This is shown in the chart below:
The Allstate Corporation Price and EPS Surprise
The Allstate Corporation price-eps-surprise | The Allstate Corporation Quote
Here is what our quantitative model predicts:
Our proven model predicts an earnings beat for Allstate this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of beating estimates, which is the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Earnings ESP: Allstate has an Earnings ESP of +5.72%.
Zacks Rank: Allstate currently has a Zacks Rank #3.
Other Stocks to Consider
Some other insurance stocks with the right combination of elements to come up with an earnings beat this reporting cycle are as follows:
Aflac Inc. (AFL - Free Report) has an Earnings ESP of +3.46% and a Zacks Rank of 3. You can see the complete list of today’s Zacks #1 Rank stocks here.
Cincinnati Financial Corporation (CINF - Free Report) has an Earnings ESP of +2.72% and a Zacks Rank of 3, presently.
NMI Holdings Inc (NMIH - Free Report) has an Earnings ESP of +5.44% and is currently Zacks #3 Ranked.
The Hottest Tech Mega-Trend of All
Last year, it generated $24 billion in global revenues. By 2020, it's predicted to blast through the roof to $77.6 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
See Zacks' 3 Best Stocks to Play This Trend >>