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Here's Why You Should Hold on to CNA Financial (CNA) Stock
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CNA Financial Corporation (CNA - Free Report) is poised for growth on the back of new business growth, improved current accident year underwriting results and effective capital deployment.
Optimistic Growth Projections
The consensus estimate for 2023 earnings is pegged at $4.15, indicating a 12.5% increase from the year-ago reported figure, driven by 6.1% higher revenues of $11 billion. The expected long-term earnings growth rate is pegged at 5%.
Earnings Surprise History
CNA Financial has a solid track record of beating earnings estimates in four of the last six quarters.
Zacks Rank & Price Performance
CNA Financial currently carries a Zacks Rank #3 (Hold). In the past year, the stock has lost 7.6% against the industry’s increase of 1.7%.
Image Source: Zacks Investment Research
Return on Equity (ROE)
CNA Financial’s ROE for the trailing 12 months is 10.1%, expanding 70 basis points year over year. This compares favorably with the industry average of 6.7%. ROE reflects the insurer’s efficiency in using shareholders’ funds.
Style Score
CNA Financial has a favorable VGM Score of B. The VGM Score helps identify stocks with the most attractive value, the best growth and the most promising momentum.
Business Tailwinds
CNA Financial remains well-poised to gain from a rise in new businesses, strong rate, lower net catastrophe losses, improved non-catastrophe current accident year underwriting results and higher net earned premium, which contribute to premium growth across its Specialty, Commercial and International segments.
The fixed-income portfolio continues to provide consistent earnings. Higher returns in the limited partnership portfolio, improved current accident year underwriting results and growth in invested asset base are likely to contribute to its net investment income.
Both loss and expense ratios stand to gain from lower net catastrophe losses, higher net earned premiums, lower acquisition costs, lower underwriting expenses and improved non-catastrophe current accident year underwriting results.
CNA Financial has been witnessing substantial improvement in the combined ratio over the past few years. Its combined ratio reflects its underwriting profitability. The company has been able to maintain an underlying combined ratio below 95 for 11 straight quarters. A lower expense ratio as well as an underlying loss ratio is expected to improve the underlying combined ratio.
The property and casualty insurer maintains a conservative capital structure and continues to sustain capital above target levels in support of the ratings. CNA maintains liquidity in the form of cash and short-term investments, which together provide sufficient liquidity to meet financial obligations.
On the back of a disciplined execution, denoted by strong underwriting results and confidence in future earnings performances, its current dividend yield of 3.7% is better than the industry average of 0.3%.
Image: Bigstock
Here's Why You Should Hold on to CNA Financial (CNA) Stock
CNA Financial Corporation (CNA - Free Report) is poised for growth on the back of new business growth, improved current accident year underwriting results and effective capital deployment.
Optimistic Growth Projections
The consensus estimate for 2023 earnings is pegged at $4.15, indicating a 12.5% increase from the year-ago reported figure, driven by 6.1% higher revenues of $11 billion. The expected long-term earnings growth rate is pegged at 5%.
Earnings Surprise History
CNA Financial has a solid track record of beating earnings estimates in four of the last six quarters.
Zacks Rank & Price Performance
CNA Financial currently carries a Zacks Rank #3 (Hold). In the past year, the stock has lost 7.6% against the industry’s increase of 1.7%.
Image Source: Zacks Investment Research
Return on Equity (ROE)
CNA Financial’s ROE for the trailing 12 months is 10.1%, expanding 70 basis points year over year. This compares favorably with the industry average of 6.7%. ROE reflects the insurer’s efficiency in using shareholders’ funds.
Style Score
CNA Financial has a favorable VGM Score of B. The VGM Score helps identify stocks with the most attractive value, the best growth and the most promising momentum.
Business Tailwinds
CNA Financial remains well-poised to gain from a rise in new businesses, strong rate, lower net catastrophe losses, improved non-catastrophe current accident year underwriting results and higher net earned premium, which contribute to premium growth across its Specialty, Commercial and International segments.
The fixed-income portfolio continues to provide consistent earnings. Higher returns in the limited partnership portfolio, improved current accident year underwriting results and growth in invested asset base are likely to contribute to its net investment income.
Both loss and expense ratios stand to gain from lower net catastrophe losses, higher net earned premiums, lower acquisition costs, lower underwriting expenses and improved non-catastrophe current accident year underwriting results.
CNA Financial has been witnessing substantial improvement in the combined ratio over the past few years. Its combined ratio reflects its underwriting profitability. The company has been able to maintain an underlying combined ratio below 95 for 11 straight quarters. A lower expense ratio as well as an underlying loss ratio is expected to improve the underlying combined ratio.
The property and casualty insurer maintains a conservative capital structure and continues to sustain capital above target levels in support of the ratings. CNA maintains liquidity in the form of cash and short-term investments, which together provide sufficient liquidity to meet financial obligations.
On the back of a disciplined execution, denoted by strong underwriting results and confidence in future earnings performances, its current dividend yield of 3.7% is better than the industry average of 0.3%.
Stocks to Consider
Some better-ranked stocks from the property and casualty insurance industry are Root, Inc. (ROOT - Free Report) , Kinsale Capital Group, Inc. (KNSL - Free Report) and First American Financial Corporation (FAF - Free Report) , each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Root delivered a trailing four-quarter average earnings surprise of 22.44%. In the past year, ROOT has lost 90%.
The Zacks Consensus Estimate for ROOT’s 2023 earnings indicates a year-over-year increase of 23.9%.
Kinsale Capital’s earnings surpassed estimates in each of the last four quarters, the average being 15.16%. In the past year, KNSL has gained 32.2%.
The Zacks Consensus Estimate for KNSL’s 2023 earnings implies a year-over-year rise of 22.6%.
First American has a solid track record of beating earnings estimates in each of the last six quarters. In the past year, FAF has lost 27.3%.
The Zacks Consensus Estimate for FAF’s 2023 earnings has moved 3.9% north in the past 60 days.