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Allstate (ALL) Down 4% Since Earnings Report: Can It Rebound?

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It has been about a month since the last earnings report for The Allstate Corporation (ALL - Free Report) . Shares have lost about 4% in that time frame.

Will the recent negative trend continue leading up to its next earnings release, or is ALL due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.

Recent Earnings

Allstate's Q1 Earnings Beat on Solid Segmental Results

Allstate Corporation’s first-quarter 2018 operating earnings per share of $2.96 surpassed the Zacks Consensus Estimate by 15.2%. Moreover, the bottom line soared 80.5% year over year, fueled by a decreased auto accident frequency, lower catastrophe loss and lowered tax incidence.

Allstate generated total revenues of $9.9 billion, outpacing the consensus mark by 19.4%. The top line also improved 6.5% year over year. This upside was driven by premium growth and an increase in net investment income.

In the quarter under review, total expenses dipped 1% year over year to $8.5 billion on lower property and casualty insurance claims and claims expense.

Solid Segmental Performance

Property-Liability insurance premiums written amounted to $7.8 billion, up 2.5% year over year. Net investment income of $45 million also increased 9.4% year over year. Underwriting income of $959 million surged 75% year over year, fueled by lower catastrophe loss, increased premiums earned and a lower auto accident frequency. Combined ratio improved 490 basis points year over year to 88%.

Service Businesses’ total revenues were $313 million, up 26.7% year over year. This upside was led by Square Trade acquisition, which was closed last year. Policies in force increased 11.7 million to 46.5 million. 

Allstate Life’s premium and contract charges of $327 million inched up 1.9% year over year, driven by growth in traditional life insurance and lower levels of reinsurance premiums ceded. Adjusted net income of $69 million improved 16.9% year over year owing to higher premiums and contract charges plus lower taxes.

Allstate Benefits’ premium and contract charges of $286 million were up 6.3%, backed by 7.4% growth in policies in force. Adjusted net income of $28 million was 27.3% higher than the prior-year quarter figure on the back of higher premiums and contract charges plus a lower tax rate.

Allstate Annuities’ premium and contract charges of $3 million remained flat year over year. Adjusted net income of $35 million grew 20.7%, attributable to higher performance-based investment income.

Capital Position

As of Mar 31, 2018, total shareholders’ equity was $23.3 billion, up 3.2% year over year.

Total assets were $113.3 billion, up 0.8% from the level at 2017-end.

Long-term debt of $6.8 billion increased 7.8% from 2017-end level.

Book value of $58.64 per share improved nearly 12% year over year.

Return on equity of 15% expanded 310 basis points year over year.

Cash inflow from operating activities totaled $626 billion, down nearly 27 8% year over year.

Capital Deployment

Allstate returned $465 million in the first quarter via share buyback ($333 million) and dividend payments ($132 million).

As of Mar 31, 2018, Allstate had $935 million remaining under its $2-billion share repurchase authorization.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in fresh estimates. There have been four revisions higher for the current quarter compared to one lower.

The Allstate Corporation Price and Consensus

VGM Scores

At this time, ALL has an average Growth Score of C, however its Momentum is doing a lot better with an A. Following the exact same course, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.

Based on our scores, the stock is more suitable for value and momentum investors than growth investors.

Outlook

Estimates have been broadly trending upward for the stock and the magnitude of these revisions looks promising. It comes with little surprise ALL has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.




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