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Allstate (ALL) Up 2.7% Since Last Earnings Report: Can It Continue?
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It has been about a month since the last earnings report for Allstate (ALL - Free Report) . Shares have added about 2.7% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Allstate due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Allstate Earnings Top Estimates in Q1, Revenues Up Y/Y
Allstate delivered first-quarter 2021 adjusted earnings of $6.11 per share, which surpassed the Zacks Consensus Estimate by 58.7%. Moreover, the bottom line surged 63.8% on a year-over-year basis. The company’s results reflect growing revenues and robust underwriting results, partly offset by elevated costs.
Revenues improved 14.1% year over year to $12 billion in the quarter attributable to improved earned premiums stemming from Protection Services segment, the buyout of National General and higher performance-based investment income. Further, the top line beat the Zacks Consensus Estimate by 10.5%.
Total costs and expenses of $9.4 billion increased 6.6% year over year primarily due to higher property and casualty (P&C) insurance claims and claims expense, accident and health insurance policy benefits, operating costs and expenses, and restructuring and related charges.
As of Mar 31, 2021, total policies in force totaled 182.9 million, up 20.6% year over year. Net investment income amounted to $708 million, which increased to nearly three-fold from the prior-year quarter’s figure, courtesy of improved performance-based income.
The company incurred $590 million of catastrophe losses in the first quarter, which rose to nearly three-fold on a year-over-year basis.
Segmental Update
Property-Liability insurance premiums written improved 13.7% year over year to $9.8 billion mainly driven by National General buyout and rise in premiums written across Allstate brand. The segment recorded an underwriting income of $1.7 billion, which rose 22.9% year over year attributable to reduced auto insurance losses in the Allstate brand, partly offset by elevated catastrophe losses.
Protection Service Business revenues of $552 million climbed 21.6% year over year in the quarter under review, courtesy of strong performance at Allstate Protection Plans.
Allstate Health and Benefits’ total premium and contract charges amounted to $455 million, which surged 61.3% year over year. The upside can be attributed to addition of group health and individual accident and health businesses following the buyout of National General.
Financial Update
The company exited the first quarter with cash balance of $709 million, which more than doubled from the 2020-end level. As of Mar 31, 2021, total assets were $129.8 billion, up 3% from the level as on Dec 31, 2020.
Long-term debt during the quarter amounted to $8 billion, which increased 2.2% from the level at 2020 end. As of Mar 31, 2021, total shareholders’ equity of $26.8 billion declined 11.2% from 2020- end level.
Capital Position (as of Mar 31, 2021)
Adjusted net income return on equity came in at 23.2%, up 570 basis points (bps) year over year. Book value per share rose 16.4% year over year to $81.08 in the first quarter. Debt-to-capital ratio of 23x in the quarter under review reflects 150 bps deterioration from the prior-year quarter’s figure.
Prudent Capital Deployment
During the quarter, the company rewarded shareholders to the tune of $601 million via share buybacks and $164 million through dividends.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in fresh estimates. The consensus estimate has shifted 15.91% due to these changes.
VGM Scores
Currently, Allstate has a nice Growth Score of B, however its Momentum Score is doing a bit better with an A. Following the exact same course, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Allstate has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Allstate (ALL) Up 2.7% Since Last Earnings Report: Can It Continue?
It has been about a month since the last earnings report for Allstate (ALL - Free Report) . Shares have added about 2.7% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Allstate due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Allstate Earnings Top Estimates in Q1, Revenues Up Y/Y
Allstate delivered first-quarter 2021 adjusted earnings of $6.11 per share, which surpassed the Zacks Consensus Estimate by 58.7%. Moreover, the bottom line surged 63.8% on a year-over-year basis. The company’s results reflect growing revenues and robust underwriting results, partly offset by elevated costs.
Revenues improved 14.1% year over year to $12 billion in the quarter attributable to improved earned premiums stemming from Protection Services segment, the buyout of National General and higher performance-based investment income. Further, the top line beat the Zacks Consensus Estimate by 10.5%.
Total costs and expenses of $9.4 billion increased 6.6% year over year primarily due to higher property and casualty (P&C) insurance claims and claims expense, accident and health insurance policy benefits, operating costs and expenses, and restructuring and related charges.
As of Mar 31, 2021, total policies in force totaled 182.9 million, up 20.6% year over year. Net investment income amounted to $708 million, which increased to nearly three-fold from the prior-year quarter’s figure, courtesy of improved performance-based income.
The company incurred $590 million of catastrophe losses in the first quarter, which rose to nearly three-fold on a year-over-year basis.
Segmental Update
Property-Liability insurance premiums written improved 13.7% year over year to $9.8 billion mainly driven by National General buyout and rise in premiums written across Allstate brand. The segment recorded an underwriting income of $1.7 billion, which rose 22.9% year over year attributable to reduced auto insurance losses in the Allstate brand, partly offset by elevated catastrophe losses.
Protection Service Business revenues of $552 million climbed 21.6% year over year in the quarter under review, courtesy of strong performance at Allstate Protection Plans.
Allstate Health and Benefits’ total premium and contract charges amounted to $455 million, which surged 61.3% year over year. The upside can be attributed to addition of group health and individual accident and health businesses following the buyout of National General.
Financial Update
The company exited the first quarter with cash balance of $709 million, which more than doubled from the 2020-end level. As of Mar 31, 2021, total assets were $129.8 billion, up 3% from the level as on Dec 31, 2020.
Long-term debt during the quarter amounted to $8 billion, which increased 2.2% from the level at 2020 end. As of Mar 31, 2021, total shareholders’ equity of $26.8 billion declined 11.2% from 2020- end level.
Capital Position (as of Mar 31, 2021)
Adjusted net income return on equity came in at 23.2%, up 570 basis points (bps) year over year. Book value per share rose 16.4% year over year to $81.08 in the first quarter. Debt-to-capital ratio of 23x in the quarter under review reflects 150 bps deterioration from the prior-year quarter’s figure.
Prudent Capital Deployment
During the quarter, the company rewarded shareholders to the tune of $601 million via share buybacks and $164 million through dividends.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in fresh estimates. The consensus estimate has shifted 15.91% due to these changes.
VGM Scores
Currently, Allstate has a nice Growth Score of B, however its Momentum Score is doing a bit better with an A. Following the exact same course, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Allstate has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.