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.
Here's Why Hold Strategy is Apt for CNA Financial (CNA)
Read MoreHide Full Article
CNA Financial Corporation (CNA - Free Report) has been gaining momentum on the back of higher retention and new business opportunities, higher underlying underwriting profit and lower net catastrophe losses.
Growth Projections
The Zacks Consensus Estimate for 2021 and 2022 earnings per share is pegged at $3.98 and $4.38, indicating year-over-year increase of nearly 47.4% and 10%, respectively. The expected long-term earnings growth is pegged at 5%.
Earnings Surprise History
CNA Financial surpassed estimates in three of the last four reported quarters, with the average beat being 0.5%.
Zacks Rank & Price Performance
CNA Financial currently carries a Zacks Rank #3 (Hold). In the past year, the stock has rallied 41.9%, outperforming the industry’s increase of 30.6%.
Style Score
The company is well poised for progress, as is evident from its favorable VGM Score of B. Here V stands for Value, G for Growth and M for Momentum, with the score being a weighted combination of all three factors.
Return on Equity (ROE)
The company’s ROE for the trailing 12 months is 6.3%, better than the industry average of 5.7%, reflecting the company’s efficiency in utilizing shareholders’ fund.
Business Tailwinds
Continued premium growth and rate momentum are likely to drive the property and casualty insurer’s top-line results. CNA Financial is well-poised to gain from renewal premium change, higher retention and new business opportunities, which continue to contribute to premium growth across its Specialty, Commercial and International segments.
The Zacks Consensus Estimate for the company’s 2021 and 2022 revenues is pegged at $11.6 billion and $12.4 billion, indicating a year-over-year increase of 21.4% and 6.2%, respectively.
Given more favorable returns from limited partnership and common equity portfolios relative to the prior year, higher reinvestment yields and favorable net prior period loss reserve development in the current year, investment income is expected to improve despite the current low interest rate environment.
Combined ratio is likely to improve in the near term on the back of improved current accident year underwriting results, higher underlying underwriting profit, and lower net catastrophe losses and claim-handling expenses. The improvement in the underlying combined ratio came from both the loss ratio and the expense ratio.
The expense ratio should continue to improve courtesy expense management and meaningful investments in talent, technology and analytics.
By virtue of improved current accident year underwriting profitability and a lower level of paid losses, operating cash flow increased 63.3% year over year in 2020. In addition to strong operating cash flow, it maintained liquidity in the form of cash and short-term investments and has sufficient liquidity to meet obligations and withstand significant business variability. The company continues to maintain capital above target levels in support of ratings. Its debt to capital of 17.9% betters the industry average of 20.6%.
Notably, CNA Financial’s dividend payments have witnessed a CAGR of 24.1% in the past seven years (2014-2021) and currently yield 3.3%, which is better than the industry average of 0.4%. This makes the stock an attractive pick for yield-seeking investors.
Alleghany’s bottom line surpassed estimates in two of the last four quarters and missed in the other two, the average beat being 34.08%.
Cincinnati Financial surpassed earnings estimates in two of the last four quarters, with the average surprise being 4.10%.
First American Financial’s bottom line surpassed estimates in three of the last four quarters and missed in one, the average beat being 15.86%.
These Stocks Are Poised to Soar Past the Pandemic
The COVID-19 outbreak has shifted consumer behavior dramatically, and a handful of high-tech companies have stepped up to keep America running. Right now, investors in these companies have a shot at serious profits. For example, Zoom jumped 108.5% in less than 4 months while most other stocks were sinking. Our research shows that 5 cutting-edge stocks could skyrocket from the exponential increase in demand for “stay at home” technologies. This could be one of the biggest buying opportunities of this decade, especially for those who get in early.
Image: Bigstock
Here's Why Hold Strategy is Apt for CNA Financial (CNA)
CNA Financial Corporation (CNA - Free Report) has been gaining momentum on the back of higher retention and new business opportunities, higher underlying underwriting profit and lower net catastrophe losses.
Growth Projections
The Zacks Consensus Estimate for 2021 and 2022 earnings per share is pegged at $3.98 and $4.38, indicating year-over-year increase of nearly 47.4% and 10%, respectively. The expected long-term earnings growth is pegged at 5%.
Earnings Surprise History
CNA Financial surpassed estimates in three of the last four reported quarters, with the average beat being 0.5%.
Zacks Rank & Price Performance
CNA Financial currently carries a Zacks Rank #3 (Hold). In the past year, the stock has rallied 41.9%, outperforming the industry’s increase of 30.6%.
Style Score
The company is well poised for progress, as is evident from its favorable VGM Score of B. Here V stands for Value, G for Growth and M for Momentum, with the score being a weighted combination of all three factors.
Return on Equity (ROE)
The company’s ROE for the trailing 12 months is 6.3%, better than the industry average of 5.7%, reflecting the company’s efficiency in utilizing shareholders’ fund.
Business Tailwinds
Continued premium growth and rate momentum are likely to drive the property and casualty insurer’s top-line results. CNA Financial is well-poised to gain from renewal premium change, higher retention and new business opportunities, which continue to contribute to premium growth across its Specialty, Commercial and International segments.
The Zacks Consensus Estimate for the company’s 2021 and 2022 revenues is pegged at $11.6 billion and $12.4 billion, indicating a year-over-year increase of 21.4% and 6.2%, respectively.
Given more favorable returns from limited partnership and common equity portfolios relative to the prior year, higher reinvestment yields and favorable net prior period loss reserve development in the current year, investment income is expected to improve despite the current low interest rate environment.
Combined ratio is likely to improve in the near term on the back of improved current accident year underwriting results, higher underlying underwriting profit, and lower net catastrophe losses and claim-handling expenses. The improvement in the underlying combined ratio came from both the loss ratio and the expense ratio.
The expense ratio should continue to improve courtesy expense management and meaningful investments in talent, technology and analytics.
By virtue of improved current accident year underwriting profitability and a lower level of paid losses, operating cash flow increased 63.3% year over year in 2020. In addition to strong operating cash flow, it maintained liquidity in the form of cash and short-term investments and has sufficient liquidity to meet obligations and withstand significant business variability. The company continues to maintain capital above target levels in support of ratings. Its debt to capital of 17.9% betters the industry average of 20.6%.
Notably, CNA Financial’s dividend payments have witnessed a CAGR of 24.1% in the past seven years (2014-2021) and currently yield 3.3%, which is better than the industry average of 0.4%. This makes the stock an attractive pick for yield-seeking investors.
Stocks to Consider
Some better-ranked stocks in the property and casualty include Alleghany , Cincinnati Financial Corporation (CINF - Free Report) and First American Financial Corporation (FAF - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Alleghany’s bottom line surpassed estimates in two of the last four quarters and missed in the other two, the average beat being 34.08%.
Cincinnati Financial surpassed earnings estimates in two of the last four quarters, with the average surprise being 4.10%.
First American Financial’s bottom line surpassed estimates in three of the last four quarters and missed in one, the average beat being 15.86%.
These Stocks Are Poised to Soar Past the Pandemic
The COVID-19 outbreak has shifted consumer behavior dramatically, and a handful of high-tech companies have stepped up to keep America running. Right now, investors in these companies have a shot at serious profits. For example, Zoom jumped 108.5% in less than 4 months while most other stocks were sinking.
Our research shows that 5 cutting-edge stocks could skyrocket from the exponential increase in demand for “stay at home” technologies. This could be one of the biggest buying opportunities of this decade, especially for those who get in early.
See the 5 high-tech stocks now>>