CNO Financial Group, Inc. ( CNO Quick Quote CNO - Free Report) is expected to remain on its growth track with the help of rising direct-to-consumer life sales and increased net investment income. Improvement in Life margin will further buoy its results.
CNO Financial — with a market cap of $2.7 billion — is a top-tier holding company for a group of insurance companies operating in the United States. It administers supplemental health insurance, annuity, individual life insurance and various other products. Courtesy of solid prospects, this currently Zacks Rank #2 (Buy) stock is worth investing in at the moment.
Let’s delve deeper.
The Zacks Consensus Estimate for CNO Financial’s 2023 earnings is pegged at $2.78 per share, indicating a 19.3% year-over-year increase. The company has witnessed one upward estimate revision in the past 60 days against none in the opposite direction. CNO beat on earnings in two of the last four quarters, met once and missed on the other occasion, the average surprise being 15.4%.
The consensus estimate for 2023 revenues stands at $3.7 billion, suggesting a 3.8% rise from the prior-year reported figure. Growth in Supplemental Health and other products are likely to be major tailwinds.
CNO Financial’s cost-curbing efforts will support its margin growth. Strategic actions to improve Life margin from the first-quarter level will likely be a major positive for the company. Our estimate for the full-year total Life margin indicates more than 12% year-over-year growth.
The company’s focus on updating products and launching new ones per customer demand is commendable. Last month, CNO’s subsidiary, Washington National Insurance Company, launched an Accident Insurance product, which will directly provide customers with lump-sum cash benefits in case of a covered accidental injury.
The company offers supplemental health and life insurance products to the middle-income group in the country. The new Accident Insurance product will likely enable customers to pay for costs that are not covered in traditional health or disability insurance plans. These initiatives are expected to boost demand for CNO’s products, which differentiate it from peers.
The company’s shareholder value-boosting efforts are noteworthy. In the first quarter of 2023, it rewarded shareholders with $32.2 million in the form of share repurchases worth $15.1 million and dividends of $17.1 million. At the first quarter-end, CNO had $171.8 million remaining buyback funds. This May, the insurer sanctioned a $500 million increase to its buyback capacity.
Shares of the company have outperformed its
industry in the year-to-date period. During this time, CNO shares have gained 2.8% against the industry’s decline of 10%. Risks
However, there are a few factors, which investors should keep an eye on.
CNO Financial’s long-term debt-to-capital stands at 59.5%, much higher than the industry's average of 32.4%. It exited the first quarter with unrestricted cash and cash equivalents of $425 million, which declined from $575.7 million at 2022-end. Also, last year, the company's free cash flow, after dividends, fell 19% to $432.4 million. In the first quarter of 2023, the metric sequentially declined by 54.5%. Nevertheless, we believe that a systematic and strategic plan of action will drive its long-term growth.
Other Key Picks
Investors interested in the broader
finance space can also check other top-ranked companies like Unum Group ( UNM Quick Quote UNM - Free Report) , MBIA Inc. ( MBI Quick Quote MBI - Free Report) and Assurant, Inc. ( AIZ Quick Quote AIZ - 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 .
Chattanooga, TN-based Unum is a global financial protection benefit solutions provider. The Zacks Consensus Estimate for UNM’s current-year earnings implies 20.6% year-over-year growth.
Based in Purchase, NY, MBIA offers financial guarantee insurance products. The Zacks Consensus Estimate for MBI’s current-year bottom line indicates a 72.4% year-over-year improvement.
Headquartered in Atlanta, GA, Assurant is a global provider of risk management solutions in the housing and lifestyle markets. The Zacks Consensus Estimate for AIZ’s 2023 earnings indicates a 3.7% year-over-year increase.