The Allstate Corporation ( ALL Quick Quote ALL - Free Report) is well-poised for growth on the back of solid top-line growth stemming from improved premiums and acquisition of National General. Prudent divestitures in sync with the company’s strategy to focus on core businesses and a strong financial position are other highlights of the stock. Zacks Rank & Price Performance
Allstate carries a Zacks Rank #3 (Hold), at present.
The stock has gained 40.8% in a year, outperforming the
industry’s growth of 20.3% and matching with the Finance sector’s rally. The S&P Index climbed 37.1% in the same time frame. Image Source: Zacks Investment Research Style Score
The company is positioned well for progress, as evident from its favorable
VGM Score of A. Here V stands for Value, G for Growth and M for Momentum, with the score being a weighted combination of all three factors. Robust Prospects
The Zacks Consensus Estimate for the company’s 2021 earnings indicate improvement of 8.8% from the prior-year’s reported figure. The consensus mark for 2021 revenues reflects growth of 10.3% from the year-ago reported number.
Positive Estimate Revision
The Zacks Consensus Estimate for 2021 earnings has moved north by 0.5% in the past 30 days.
Impressive Earnings Surprise History
Allstate beat earnings estimates in three of the trailing four quarters and missed once, the average surprise being 51.31%.
Improving property and casualty (P&C) insurance premiums, well-diversified portfolio, pricing discipline and continuous product enhancements have been driving the company’s revenues. Allstate intends to reposition its product portfolio by shifting focus from high-risk businesses to middle-market auto and home insurance units.
The company has been pursuing buyouts to bolster its capabilities and broaden nationwide presence, which in turn, has contributed to the top-line growth. Case in point, the buyout of National General has provided a boost to revenue growth of 23.8% in the first half of 2021.
The company’s long-term strategy includes growing market share in personal property-liability and expanding protection solutions for customers. Thus, it has been undertaking divestitures to extract capital out of businesses that fetch lower returns and growth. The company’s life and annuity businesses took a hit last year due to the pandemic-induced lower interest rates and elevated mortality claims, which in turn dimmed Allstate’s prospects to some extent. Consequently, it divested Allstate Life Insurance Company (“ALIC”) in January of this year, followed by the Allstate Life Insurance Company of New York (“ALNY”) deal of March 2021. These divestitures marked Allstate’s complete exit from life and annuity businesses.
The company has been pursuing several cost-cutting efforts, which has enabled it to invest significantly in growth and technology. The company strives to reduce underwriting claims expenses in a bid to provide affordable protection solutions to customers.
Allstate boasts of a strong liquidity position backed by an increasing cash balance. It remains inclined toward prudently deploying capital to shareholders through share buybacks and dividend hikes. Recently, the company approved a share repurchase program of $5 billion, which is anticipated to be completed within Mar 31, 2023. This year, management approved a 50% hike in the quarterly dividend. Its dividend yield of 2.5% compares favorably with the industry’s figure of 0.4%. Tactical utilization of shareholders’ funds is further reflected by Allstate’s trailing 12-month return on equity (ROE) of 22.3%, which is higher than the industry’s figure of 5.7%.
Stocks to Consider
Some better-ranked stocks in the same space include
American Financial Group, Inc. ( AFG Quick Quote AFG - Free Report) , Chubb Limited ( CB Quick Quote CB - Free Report) and Cincinnati Financial Corporation ( CINF Quick Quote CINF - Free Report) , each sporting a Zacks Rank #1 (Strong Buy). You can see . the complete list of today’s Zacks #1 Rank stocks here
American Financial, Chubb Limited and Cincinnati Financial have a trailing four-quarter earnings surprise of 52.82%, 7.14% and 36.01%, on average, respectively.