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Reasons Why CNA Financial (CNA) Stock is a Solid Pick Now
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CNA Financial Corporation (CNA - Free Report) has been favored by investors on the back of the new business growth, higher net earned premium and sufficient liquidity.
Optimistic Growth Projections
The consensus estimate for 2023 and 2024 earnings is pegged at $4.24 and $4.39, indicating 10.4% and 3.5% increase from the year-ago reported figure, driven by 5.8% and 2.8% higher revenues of $11.1 billion and $11.4 billion, respectively. 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 five of the last seven quarters.
Zacks Rank & Price Performance
CNA Financial currently carries a Zacks Rank #2 (Buy). In the past year, the stock has lost 21.5% compared with the industry’s decrease of 14.7%.
Image Source: Zacks Investment Research
Return on Equity (ROE)
CNA Financial’s ROE for the trailing 12 months is 11.3%, expanding 250 basis points year over year. ROE reflects the insurer’s efficiency in using shareholders’ funds.
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. The improved combined ratio reflects a stable underlying combined ratio, lower catastrophe losses and increased favorable prior-period development.
CNA Financial continues to maintain a conservative capital structure with a leverage ratio of 18%, excluding AOCI. Operating cash flow is expected to gain from the prior-year payment of the Excess Workers' Compensation and Loss Portfolio Transfer premium.
In February 2023, CNA Financial’s board approved a 5% hike in quarterly dividend. Simultaneously, CNA announced a special dividend of $1.20 per share, marking nine special dividends. The insurer’s quarterly dividend payment has witnessed a 10-year CAGR (2013-2023) of 7.7%. The current dividend yield of 4.4% is better than the industry average of 0.3%.
CNA Financial has an impressive Value Score of A, reflecting an attractive valuation of the stock.
Other Stocks to Consider
Some other top-ranked stocks from the property and casualty insurance industry are Axis Capital Holdings Limited (AXS - Free Report) , Everest Re Group, Ltd. and Kinsale Capital Group, Inc. (KNSL - Free Report) , each sporting a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Axis Capital beat estimates in three of the last four quarters and missed in one, the average being 5.70%. The Zacks Consensus Estimate for 2023 and 2024 has moved 5% and 0.3%, north, respectively, in the past 60 days.
The Zacks Consensus Estimate for AXS’ 2023 and 2024 earnings per share is pegged at $7.50 and $8.50, indicating year-over-year increase of 29% and 13.3%, respectively. In the past year, AXS has lost 6.6%.
The Zacks Consensus Estimate for RE’s 2023 and 2024 earnings per share is pegged at $45.63 and $53.02, indicating year-over-year increase of 68.5% and 16.1%, respectively. In the past year, RE has gained 19%.
RE beat estimates in each of the last four quarters, the average being 18.41%.
Kinsale Capital has a solid track record of beating earnings estimates in each of the last four quarters, the average being 13.83%. In the past year, KNSL has gained 26.7%.
The Zacks Consensus Estimate for KNSL’s 2023 and 2024 earnings per share is pegged at $9.86 and $11.85, indicating year-over-year increase of 26.4% and 20.2%, respectively.
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Reasons Why CNA Financial (CNA) Stock is a Solid Pick Now
CNA Financial Corporation (CNA - Free Report) has been favored by investors on the back of the new business growth, higher net earned premium and sufficient liquidity.
Optimistic Growth Projections
The consensus estimate for 2023 and 2024 earnings is pegged at $4.24 and $4.39, indicating 10.4% and 3.5% increase from the year-ago reported figure, driven by 5.8% and 2.8% higher revenues of $11.1 billion and $11.4 billion, respectively. 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 five of the last seven quarters.
Zacks Rank & Price Performance
CNA Financial currently carries a Zacks Rank #2 (Buy). In the past year, the stock has lost 21.5% compared with the industry’s decrease of 14.7%.
Image Source: Zacks Investment Research
Return on Equity (ROE)
CNA Financial’s ROE for the trailing 12 months is 11.3%, expanding 250 basis points year over year. ROE reflects the insurer’s efficiency in using shareholders’ funds.
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. The improved combined ratio reflects a stable underlying combined ratio, lower catastrophe losses and increased favorable prior-period development.
CNA Financial continues to maintain a conservative capital structure with a leverage ratio of 18%, excluding AOCI. Operating cash flow is expected to gain from the prior-year payment of the Excess Workers' Compensation and Loss Portfolio Transfer premium.
In February 2023, CNA Financial’s board approved a 5% hike in quarterly dividend. Simultaneously, CNA announced a special dividend of $1.20 per share, marking nine special dividends. The insurer’s quarterly dividend payment has witnessed a 10-year CAGR (2013-2023) of 7.7%. The current dividend yield of 4.4% is better than the industry average of 0.3%.
CNA Financial has an impressive Value Score of A, reflecting an attractive valuation of the stock.
Other Stocks to Consider
Some other top-ranked stocks from the property and casualty insurance industry are Axis Capital Holdings Limited (AXS - Free Report) , Everest Re Group, Ltd. and Kinsale Capital Group, Inc. (KNSL - Free Report) , each sporting a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Axis Capital beat estimates in three of the last four quarters and missed in one, the average being 5.70%. The Zacks Consensus Estimate for 2023 and 2024 has moved 5% and 0.3%, north, respectively, in the past 60 days.
The Zacks Consensus Estimate for AXS’ 2023 and 2024 earnings per share is pegged at $7.50 and $8.50, indicating year-over-year increase of 29% and 13.3%, respectively. In the past year, AXS has lost 6.6%.
The Zacks Consensus Estimate for RE’s 2023 and 2024 earnings per share is pegged at $45.63 and $53.02, indicating year-over-year increase of 68.5% and 16.1%, respectively. In the past year, RE has gained 19%.
RE beat estimates in each of the last four quarters, the average being 18.41%.
Kinsale Capital has a solid track record of beating earnings estimates in each of the last four quarters, the average being 13.83%. In the past year, KNSL has gained 26.7%.
The Zacks Consensus Estimate for KNSL’s 2023 and 2024 earnings per share is pegged at $9.86 and $11.85, indicating year-over-year increase of 26.4% and 20.2%, respectively.