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CNO Financial (CNO) Hits 52 Week High: Will the Rally Remain?

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On Feb 22, shares of CNO Financial Group, Inc. (CNO - Free Report) touched a 52-week high of $24.68 before closing the session a tad lower at $24.36.

Over the past year, this multiline insurer’s stock has rallied 32.6% compared with its industry’s growth of 3.8%. The performance also looks stellar against stock movements of other companies like Radian Group Inc. (RDN - Free Report) , MGIC Investment Corporation (MTG - Free Report) and Prudential Financial, Inc. (PRU - Free Report) , which have lost 13.4%, 3.4% and 2%, respectively, in the same time frame. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

This upside is attributable to the company’s recently reported fourth-quarter results.

Its fourth-quarter 2020 adjusted earnings per share of 57 cents improved 21.3% year over year. The company’s results benefited from higher revenues and reduced costs. Moreover, the company’s total revenues inched up 0.7% year over year to $1.07 billion, driven by higher insurance policy income, improved general account sales, etc. The top line also outpaced the consensus mark by 26.7%.

What’s Driving This Outperformance?

The company has been taking initiatives to curb its costs. Its benefits and expenses declined 7.1% year over year. It will pursue further strategic actions to control costs and enhance its earnings profile. Going forward, its expenses are expected to decline on the back of its cost-containment program.

CNO Financial invested significantly in technology to improve agent productivity as well as sales and advertising. This is expected to improve online customer experience and enhance lead productivity. The company also deployed technology, equipment and training to allow the agent to serve clients via virtual consultations and digital insurance applications.

Additionally, consumers can buy Medicare products online. The company further introduced its digital health insurance marketplace named my, which is likely to strengthen its foothold in the online health insurance market.

With added technology, CNO Financial has the accessibility to employer partners, which was absent earlier due to dearth of a sophisticated benefits platform offer.

At fourth-quarter end, its consolidated RBC ratio was 411%, up from 408% in the prior-year quarter. CNO Financial has been raising its quarterly dividend since 2013. During 2020, the company returned $330 million capital to its shareholders through share buybacks and dividends worth $263 million and $67 million, respectively. This should in turn instill investors’ confidence in the stock.

CNO Financial continues to roll out solutions for customers without a financial product in the senior middle market, which reinforced their belief in the company. The solutions primarily strive to expand the asset value of clients and simultaneously take care of their escalating healthcare costs as they attain the age of retirement.

We believe that these efforts will continue to augur well for the company in the long haul, helping it scale new heights.

Further Upside Left?

The company’s enhanced portfolio and solvency position are likely to position it well for long-term growth. The company has an impressive Value Score of A, reflecting its attractive stock value.

This currently Zacks Rank #3 (Hold) insurer is poised to benefit from a well-diversified product portfolio comprising life, fixed annuities, Medicare supplement, supplemental health and a limited benefit duration long-term care (LTC).

The company’s expenses are expected to decline going forward, backed by its efficient cost management.

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