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Here's Why You Should Retain CNA Financial (CNA) Stock Now
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CNA Financial Corporation (CNA - Free Report) has been gaining momentum on the back of new businesses, improved non-catastrophe current accident year underwriting results, higher earned premium and effective capital deployment.
Optimistic Growth Projections
The Zacks Consensus Estimate for CNA Financial’s 2024 earnings per share indicates a year-over-year increase of 6.3% from the consensus estimate of 2023. The consensus estimate for revenues is pegged at $12.19 billion, implying a year-over-year improvement of 3.5% from the consensus mark of 2023.
The consensus estimate for 2025 revenues is pinned at $12.96 billion, implying a year-over-year improvement of 6.3% from the consensus mark of 2024.
Northbound Estimate Revision
The Zacks Consensus Estimate for CNA Financial’s 2025 earnings has moved 7.3% north in the past 60 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 currently carries a Zacks Rank #3 (Hold). In the past year, the stock has gained 16% compared with the industry’s growth of 33.8%.
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.
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 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.
A robust balance sheet 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%. 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.
Axis Capital has a solid track record of beating earnings estimates in each of the trailing four quarters, the average being 102.57%. In the past year, AXS has gained 18.6%.
The Zacks Consensus Estimate for AXS’ 2024 and 2025 earnings implies year-over-year growth of 3% and 10%, respectively, from the consensus estimate of the corresponding years.
HCI Group has a solid track record of beating earnings estimates in each of the trailing four quarters, the average being 522.51%. In the past year, HCI has surged 100.2%.
The Zacks Consensus Estimate for HCI’s 2024 and 2025 earnings implies year-over-year growth of 37.9% and 11.6%, respectively, from the consensus estimate of the corresponding years.
Palomar has a solid track record of beating earnings estimates in each of the trailing four quarters, the average being 11.12%. In the past year, PLMR has rallied 56.4%.
The Zacks Consensus Estimate for PLMR’s 2024 and 2025 earnings implies year-over-year growth of 16.2% and 18%, respectively, from the consensus estimate of the corresponding years.
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Here's Why You Should Retain CNA Financial (CNA) Stock Now
CNA Financial Corporation (CNA - Free Report) has been gaining momentum on the back of new businesses, improved non-catastrophe current accident year underwriting results, higher earned premium and effective capital deployment.
Optimistic Growth Projections
The Zacks Consensus Estimate for CNA Financial’s 2024 earnings per share indicates a year-over-year increase of 6.3% from the consensus estimate of 2023. The consensus estimate for revenues is pegged at $12.19 billion, implying a year-over-year improvement of 3.5% from the consensus mark of 2023.
The consensus estimate for 2025 revenues is pinned at $12.96 billion, implying a year-over-year improvement of 6.3% from the consensus mark of 2024.
Northbound Estimate Revision
The Zacks Consensus Estimate for CNA Financial’s 2025 earnings has moved 7.3% north in the past 60 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 currently carries a Zacks Rank #3 (Hold). In the past year, the stock has gained 16% compared with the industry’s growth of 33.8%.
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.
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 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.
A robust balance sheet 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%. 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 Axis Capital Holdings Limited (AXS - Free Report) , HCI Group, Inc. (HCI - Free Report) and Palomar Holdings, Inc. (PLMR - 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 has a solid track record of beating earnings estimates in each of the trailing four quarters, the average being 102.57%. In the past year, AXS has gained 18.6%.
The Zacks Consensus Estimate for AXS’ 2024 and 2025 earnings implies year-over-year growth of 3% and 10%, respectively, from the consensus estimate of the corresponding years.
HCI Group has a solid track record of beating earnings estimates in each of the trailing four quarters, the average being 522.51%. In the past year, HCI has surged 100.2%.
The Zacks Consensus Estimate for HCI’s 2024 and 2025 earnings implies year-over-year growth of 37.9% and 11.6%, respectively, from the consensus estimate of the corresponding years.
Palomar has a solid track record of beating earnings estimates in each of the trailing four quarters, the average being 11.12%. In the past year, PLMR has rallied 56.4%.
The Zacks Consensus Estimate for PLMR’s 2024 and 2025 earnings implies year-over-year growth of 16.2% and 18%, respectively, from the consensus estimate of the corresponding years.