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Here's Why You Should Hold CNA Financial (CNA) Stock Now
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CNA Financial Corporation (CNA - Free Report) is poised to gain on the back of new businesses, improved non-catastrophe current accident year underwriting results, higher net earned premiums and effective capital deployment.
Optimistic Growth Projections
The Zacks Consensus Estimate for 2024 earnings per share is pegged at $5.16, indicating an increase of 9.5% from the year-ago reported figure, driven by 2.8% higher revenues of $12.11 billion. The expected long-term earnings growth rate is pegged at 5%.
Northbound Estimate Revision
The Zacks Consensus Estimate for CNA Financial’s 2023 and 2024 earnings has moved 0.5% and 7.5% north, respectively, in the past 30 days. This should instill investors' confidence in the stock.
Earnings Surprise History
CNA Financial has a solid track record of beating earnings estimates in three of the last four quarters while missing in one, the average being 10.79%.
Zacks Rank & Price Performance
CNA Financial currently carries a Zacks Rank #3 (Hold). In the past year, the stock has gained 2.5% compared with the industry’s growth of 26%.
Image Source: Zacks Investment Research
Return on Equity (ROE)
In the fourth quarter of 2023, CNA Financial’s trailing 12-month ROE expanded 300 basis points (bps) to 14.3%. The core ROE expanded 370 bps to 10.6% in 2023. 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, best growth and 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.
Net investment income should gain from fixed-income securities and other investments, as well as a rise in income from limited partnership and common stock investments. Fixed income continues to benefit from favorable reinvestment yields and strong operating cash flows. CNA Financial’s fixed-income investment strategy with the highest allocations to diversified investment grade corporates, as well as highly rated municipal securities, should support investment results.
CNA has been able to maintain the underlying combined ratio below 95 for 13 straight quarters. Despite the elevated industry catastrophe losses in 2023, the P&C all-in combined ratio was strong at 93.5, while the P&C underlying combined ratio was 90.9%, which improved 30 basis bps year over year.
The company has a solid balance sheet, with capital remaining above the target levels required for all ratings. Cash flow from P&C underwriting activities and fixed-income investments remained very strong, reflecting continued excellent underwriting and fixed-income results.
Robust balance sheets and cash flows enable CNA Financial to engage in shareholder-friendly moves like dividend hikes. The company’s quarterly dividend payment witnessed a 10-year CAGR (2014-2024) of 5.8%. The current dividend yield of 3.9% is better than the industry average of 0.2%. On the back of a disciplined execution, denoted by strong underwriting results and confidence in future earnings performances, the company hiked its dividend over the past couple of years.
Arch Capital has a solid record of beating earnings estimates in each of the last trailing four quarters, the average being 27.32%. Over the past year, ACGL has jumped 27%.
The Zacks Consensus Estimate for the company’s 2023 and 2024 revenues is pegged at $15.52 billion and $16.93 billion, indicating a year-over-year increase of 15% and 9%, respectively.
Axis Capital has a solid record of beating earnings estimates in each of the last trailing four quarters, the average being 102.57%. In the past year, the insurer has lost 1.3%.
The Zacks Consensus Estimate for the company’s 2023 and 2024 earnings per share is pegged at $10.10 and $11.07, indicating a year-over-year increase of 2.5% and 9.6%, respectively.
Mercury General beat estimates in three of the last four quarters and matched in one, the average being 3,417.48%. In the past year, the insurer has gained 38.7%.
The Zacks Consensus Estimate for the company’s 2023 and 2024 earnings per share is pegged at $2.90 and $3.90, indicating a year-over-year rise of 866.67% and 34.48%, respectively.
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Here's Why You Should Hold CNA Financial (CNA) Stock Now
CNA Financial Corporation (CNA - Free Report) is poised to gain on the back of new businesses, improved non-catastrophe current accident year underwriting results, higher net earned premiums and effective capital deployment.
Optimistic Growth Projections
The Zacks Consensus Estimate for 2024 earnings per share is pegged at $5.16, indicating an increase of 9.5% from the year-ago reported figure, driven by 2.8% higher revenues of $12.11 billion. The expected long-term earnings growth rate is pegged at 5%.
Northbound Estimate Revision
The Zacks Consensus Estimate for CNA Financial’s 2023 and 2024 earnings has moved 0.5% and 7.5% north, respectively, in the past 30 days. This should instill investors' confidence in the stock.
Earnings Surprise History
CNA Financial has a solid track record of beating earnings estimates in three of the last four quarters while missing in one, the average being 10.79%.
Zacks Rank & Price Performance
CNA Financial currently carries a Zacks Rank #3 (Hold). In the past year, the stock has gained 2.5% compared with the industry’s growth of 26%.
Image Source: Zacks Investment Research
Return on Equity (ROE)
In the fourth quarter of 2023, CNA Financial’s trailing 12-month ROE expanded 300 basis points (bps) to 14.3%. The core ROE expanded 370 bps to 10.6% in 2023. 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, best growth and 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.
Net investment income should gain from fixed-income securities and other investments, as well as a rise in income from limited partnership and common stock investments. Fixed income continues to benefit from favorable reinvestment yields and strong operating cash flows. CNA Financial’s fixed-income investment strategy with the highest allocations to diversified investment grade corporates, as well as highly rated municipal securities, should support investment results.
CNA has been able to maintain the underlying combined ratio below 95 for 13 straight quarters. Despite the elevated industry catastrophe losses in 2023, the P&C all-in combined ratio was strong at 93.5, while the P&C underlying combined ratio was 90.9%, which improved 30 basis bps year over year.
The company has a solid balance sheet, with capital remaining above the target levels required for all ratings. Cash flow from P&C underwriting activities and fixed-income investments remained very strong, reflecting continued excellent underwriting and fixed-income results.
Robust balance sheets and cash flows enable CNA Financial to engage in shareholder-friendly moves like dividend hikes. The company’s quarterly dividend payment witnessed a 10-year CAGR (2014-2024) of 5.8%. The current dividend yield of 3.9% is better than the industry average of 0.2%. On the back of a disciplined execution, denoted by strong underwriting results and confidence in future earnings performances, the company hiked its dividend over the past couple of years.
Stocks to Consider
Some better-ranked stocks from the property and casualty insurance industry are Arch Capital Group Ltd. (ACGL - Free Report) , Axis Capital Holdings Limited (AXS - Free Report) and Mercury General Corporation (MCY - 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.
Arch Capital has a solid record of beating earnings estimates in each of the last trailing four quarters, the average being 27.32%. Over the past year, ACGL has jumped 27%.
The Zacks Consensus Estimate for the company’s 2023 and 2024 revenues is pegged at $15.52 billion and $16.93 billion, indicating a year-over-year increase of 15% and 9%, respectively.
Axis Capital has a solid record of beating earnings estimates in each of the last trailing four quarters, the average being 102.57%. In the past year, the insurer has lost 1.3%.
The Zacks Consensus Estimate for the company’s 2023 and 2024 earnings per share is pegged at $10.10 and $11.07, indicating a year-over-year increase of 2.5% and 9.6%, respectively.
Mercury General beat estimates in three of the last four quarters and matched in one, the average being 3,417.48%. In the past year, the insurer has gained 38.7%.
The Zacks Consensus Estimate for the company’s 2023 and 2024 earnings per share is pegged at $2.90 and $3.90, indicating a year-over-year rise of 866.67% and 34.48%, respectively.