Back to top

Analyst Blog

Zacks Equity Research

CNO Financial (CNO): Why You Should Still Hold the Stock

CNO FAF Y ACGL

Trades from $3

On Nov 22, CNO Financial Group Inc. (CNO - Free Report) was upgraded to a Zacks Rank #3 (Hold).

Why the Upgrade?

The Zacks Consensus Estimate that is currently pegged at $1.38 for 2016 witnessed an upward revision of 0.7% over the last 30 days.  In three of the last four quarters, the company has posted positive earnings surprises.

CNO Financial’s third-quarter 2016 earnings outperformance has in all probability driven the upward revision of estimates. The company’s adjusted earnings per share of 37 cents beat the Zacks Consensus Estimate by 5.7% and grew 23% year over year driven by solid revenues. Total revenues increased 12.4% year over year to $1 billion on the back of higher premiums at Bankers’ Life and Colonial Penn segments. Total collected premiums inched up 2% year over year to $900 million.

The company has been taking up initiatives to strengthen its fundamentals. Strategic recapitalization has resulted in financial flexibility, extended debt maturities, eliminated cash flow sweeps, restricted payment baskets and increased deployable capital. CNO Financial has successfully retained shareholders’ confident with the frequent share repurchases and dividends payouts. It has repurchased $52.0 million of common stock during the third quarter at an average cost of $16.80 per share and paid $13.9 million via dividends on the common stock.

The company’s commendable liquidity backed by its strong cash position helped it to make numerous high return-yielding investments. Initiatives like boosting agent productivity, geographic expansion, product launches, worksite platform distribution as well as enhancement of operating efficiencies and customer retention have supported growth and operational efficiency.

CNO FINL GRP Price and Consensus

 

Zacks Rank and Stocks to Consider

CNO Financial presently carries a Zacks Rank #3 (Hold).

Better-ranked stocks from the insurance industry that warrant a look include Alleghany Corporation (Y - Free Report) , First American Financial Corporation (FAF - Free Report) and Arch Capital Group Ltd. (ACGL - Free Report) . Each of these stocks sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Alleghany Corporation deals with Property & Casualty reinsurance and insurance businesses in the U.S. and internationally. The company recorded positive surprises in three of the last four quarters, the average beat being 20.52%.

First American Financial is a leading provider of title insurance and settlement services to the real estate and mortgage industries in the U.S. The company beat estimates in all the trailing last four quarters with an average beat of 14.32%

Arch Capital offers property, casualty, and mortgage insurance and reinsurance products worldwide. It posted positive surprises in all of the last four quarters, with an average beat of 9.27%.

The Best Place to Start Your Stock Search

Today, you are invited to download the full list of 220 Zacks Rank #1 "Strong Buy" stocks – absolutely free of charge. Since 1988, Zacks Rank #1 stocks have nearly tripled the market, with average gains of +26% per year. Plus, you can access the list of portfolio-killing Zacks Rank #5 "Strong Sells" and other private research. See these stocks free >>