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Will Strong Commercial Lines Aid Hartford Financial's Q3 Earnings?
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The Hartford Financial Services Group, Inc. (HIG - Free Report) is slated to release third-quarter 2024 results on Oct. 25, after the closing bell. The Zacks Consensus Estimate for HIG’s third-quarter earnings per share is pegged at $2.49, which indicates an improvement of 8.7% from the year-ago quarter’s reported figure.
Stay up-to-date with all quarterly releases: See Zacks Earnings Calendar.
The third-quarter earnings estimate has witnessed upward revisions over the past seven days against no movement in the opposite direction, resulting in an increase of 3 cents from $2.46 per share. The consensus mark for revenues is $4.6 billion, indicating 9.7% growth from the prior-year quarter’s actual.
Image Source: Zacks Investment Research
Hartford Financial’s bottom line beat estimates in three of the trailing four quarters and missed the mark once, the average surprise being 13.1%. This is depicted in the chart below:
The Hartford Financial Services Group, Inc. Price and EPS Surprise
Our proven model predicts a likely earnings beat for Hartford Financial this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. That’s precisely the case here.
Earnings ESP: Hartford Financial has an Earnings ESP of +2.27%. This is because the Most Accurate Estimate currently is $2.54 per share, higher than the Zacks Consensus Estimate of $2.49. You can uncover the best stocks before they are reported with our Earnings ESP Filter.
Zacks Rank: HIG currently has a Zacks Rank of 3.
Now, let us see how things have shaped up before the third-quarter earnings announcement.
Factors to Note
Hartford Financial's top line is expected to have witnessed growth in the third quarter, driven by higher premiums across its Commercial Lines, Personal Lines, and Group Benefits segments. The Zacks Consensus Estimate for total net premiums earned stands at $5.7 billion, reflecting an 8% increase compared to the same quarter last year.
For the Personal Lines segment, strategic rate increases and renewal written price improvements are expected to have boosted results. The homeowners’ insurance segment is likely to have benefited from favorable net rates and higher insured values. Underwriting results may have faced challenges from continued severity losses and inflationary pressures in auto insurance. The Zacks Consensus Estimate for Personal Lines earned premiums is pegged at $836.4 million, representing a 10% increase year over year.
In the Commercial Lines segment, consistent rate hikes, new business expansion, strong retention, and solid submission volumes are likely to have contributed to growth, although this may have been partially offset by catastrophe losses affecting underwriting results. The consensus estimate for earned premiums in this segment is $3.3 billion, suggesting a 10.6% rise from the prior-year quarter.
The Group Benefits segment is likely to have been supported by growth in fully insured ongoing premiums, improved mortality trends, and strong long-term disability claim recoveries. The consensus estimate for the segment’s revenues is pegged at $1.8 billion, reflecting a 4.1% increase from the prior-year period.
Additionally, Hartford Financial’s third-quarter investment performance may have benefited from higher returns in its private equity portfolio. These might have helped the company’s results, making an earnings beat certain.
However, the bottom line is expected to have been pressured by rising benefits, losses and loss adjustment expenses, as well as higher insurance operating costs. HIG’s margins are also likely to have been impacted by ongoing investments in digital, analytics and data science capabilities.
Price Performance
Hartford Financial's stock has exhibited an upward movement, gaining a notable percentage in the year-to-date period. It has surged 51.8% compared with the industry’s 22.7% growth. Additionally, the stock has outperformed the Finance sector and S&P 500 Index, which rallied 19.3% and 22.9%, respectively, during the same period.
HIG's YTD Price Performance
Image Source: Zacks Investment Research
Final Words
Hartford Financial's strategic rate increases, new business expansion, and investments in digital capabilities position the company for future growth. However, investors should consider the persistent cost pressures and inflationary challenges the company faces. Those who already hold the stock might consider maintaining their position to capitalize on its growth potential, while new investors may prefer to wait for a more opportune moment to buy this stock.
Stocks to Consider
Here are some companies from the broader Finance space, which according to our model, have the right combination of elements to beat on earnings this time around:
The Zacks Consensus Estimate for MKTX’s third-quarter 2024 earnings is pegged at $1.82 per share, which indicates an improvement of 24.7% from the year-ago quarter’s reported figure.
MKTX’s earnings beat estimates in three of the trailing four quarters, missing once, the average surprise being 2.6%.
CME Group Inc. (CME - Free Report) has an Earnings ESP of +1.93% and a Zacks Rank of 2 at present. The Zacks Consensus Estimate for CME’s third-quarter earnings is pegged at $2.60 per share, which implies a 15.6% rise from the year-ago quarter’s reported figure.
CME’s earnings beat estimates in each of the trailing four quarters, the average surprise being 2.7%.
Brighthouse Financial, Inc. (BHF - Free Report) has an Earnings ESP of +1.22% and a Zacks Rank of 2, at present. The Zacks Consensus Estimate for BHF’s third-quarter earnings is pegged at $4.50 per share, which indicates an improvement of 6.1% from the year-ago quarter’s reported figure.
BHF’s earnings beat estimates in three of the trailing four quarters and missed the mark once, the average surprise being 3.8%.
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Will Strong Commercial Lines Aid Hartford Financial's Q3 Earnings?
The Hartford Financial Services Group, Inc. (HIG - Free Report) is slated to release third-quarter 2024 results on Oct. 25, after the closing bell. The Zacks Consensus Estimate for HIG’s third-quarter earnings per share is pegged at $2.49, which indicates an improvement of 8.7% from the year-ago quarter’s reported figure.
Stay up-to-date with all quarterly releases: See Zacks Earnings Calendar.
The third-quarter earnings estimate has witnessed upward revisions over the past seven days against no movement in the opposite direction, resulting in an increase of 3 cents from $2.46 per share. The consensus mark for revenues is $4.6 billion, indicating 9.7% growth from the prior-year quarter’s actual.
Image Source: Zacks Investment Research
Hartford Financial’s bottom line beat estimates in three of the trailing four quarters and missed the mark once, the average surprise being 13.1%. This is depicted in the chart below:
The Hartford Financial Services Group, Inc. Price and EPS Surprise
The Hartford Financial Services Group, Inc. price-eps-surprise | The Hartford Financial Services Group, Inc. Quote
Q3 Earnings Whispers for HIG
Our proven model predicts a likely earnings beat for Hartford Financial this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. That’s precisely the case here.
Earnings ESP: Hartford Financial has an Earnings ESP of +2.27%. This is because the Most Accurate Estimate currently is $2.54 per share, higher than the Zacks Consensus Estimate of $2.49. You can uncover the best stocks before they are reported with our Earnings ESP Filter.
Zacks Rank: HIG currently has a Zacks Rank of 3.
Now, let us see how things have shaped up before the third-quarter earnings announcement.
Factors to Note
Hartford Financial's top line is expected to have witnessed growth in the third quarter, driven by higher premiums across its Commercial Lines, Personal Lines, and Group Benefits segments. The Zacks Consensus Estimate for total net premiums earned stands at $5.7 billion, reflecting an 8% increase compared to the same quarter last year.
For the Personal Lines segment, strategic rate increases and renewal written price improvements are expected to have boosted results. The homeowners’ insurance segment is likely to have benefited from favorable net rates and higher insured values. Underwriting results may have faced challenges from continued severity losses and inflationary pressures in auto insurance. The Zacks Consensus Estimate for Personal Lines earned premiums is pegged at $836.4 million, representing a 10% increase year over year.
In the Commercial Lines segment, consistent rate hikes, new business expansion, strong retention, and solid submission volumes are likely to have contributed to growth, although this may have been partially offset by catastrophe losses affecting underwriting results. The consensus estimate for earned premiums in this segment is $3.3 billion, suggesting a 10.6% rise from the prior-year quarter.
The Group Benefits segment is likely to have been supported by growth in fully insured ongoing premiums, improved mortality trends, and strong long-term disability claim recoveries. The consensus estimate for the segment’s revenues is pegged at $1.8 billion, reflecting a 4.1% increase from the prior-year period.
Additionally, Hartford Financial’s third-quarter investment performance may have benefited from higher returns in its private equity portfolio. These might have helped the company’s results, making an earnings beat certain.
However, the bottom line is expected to have been pressured by rising benefits, losses and loss adjustment expenses, as well as higher insurance operating costs. HIG’s margins are also likely to have been impacted by ongoing investments in digital, analytics and data science capabilities.
Price Performance
Hartford Financial's stock has exhibited an upward movement, gaining a notable percentage in the year-to-date period. It has surged 51.8% compared with the industry’s 22.7% growth. Additionally, the stock has outperformed the Finance sector and S&P 500 Index, which rallied 19.3% and 22.9%, respectively, during the same period.
HIG's YTD Price Performance
Image Source: Zacks Investment Research
Final Words
Hartford Financial's strategic rate increases, new business expansion, and investments in digital capabilities position the company for future growth. However, investors should consider the persistent cost pressures and inflationary challenges the company faces. Those who already hold the stock might consider maintaining their position to capitalize on its growth potential, while new investors may prefer to wait for a more opportune moment to buy this stock.
Stocks to Consider
Here are some companies from the broader Finance space, which according to our model, have the right combination of elements to beat on earnings this time around:
MarketAxess Holdings Inc. (MKTX - Free Report) currently has an Earnings ESP of +1.62% and a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for MKTX’s third-quarter 2024 earnings is pegged at $1.82 per share, which indicates an improvement of 24.7% from the year-ago quarter’s reported figure.
MKTX’s earnings beat estimates in three of the trailing four quarters, missing once, the average surprise being 2.6%.
CME Group Inc. (CME - Free Report) has an Earnings ESP of +1.93% and a Zacks Rank of 2 at present. The Zacks Consensus Estimate for CME’s third-quarter earnings is pegged at $2.60 per share, which implies a 15.6% rise from the year-ago quarter’s reported figure.
CME’s earnings beat estimates in each of the trailing four quarters, the average surprise being 2.7%.
Brighthouse Financial, Inc. (BHF - Free Report) has an Earnings ESP of +1.22% and a Zacks Rank of 2, at present. The Zacks Consensus Estimate for BHF’s third-quarter earnings is pegged at $4.50 per share, which indicates an improvement of 6.1% from the year-ago quarter’s reported figure.
BHF’s earnings beat estimates in three of the trailing four quarters and missed the mark once, the average surprise being 3.8%.