Back to top

Assurant, Inc. (AIZ) Q3 Earnings: Is a Beat in the Cards?

Read MoreHide Full Article

Assurant, Inc. (AIZ - Free Report) is slated to report third-quarter 2018 results on Nov 6, after the market closes. In the last reported quarter, the company delivered a positive earnings surprise of 11.64%.

Let’s see, how things are shaping up for this announcement.

Assurant is likely to report bottom-line growth in the to-be-reported quarter, mainly driven by solid organic growth across Global Lifestyle as well as Housing business lines. This probable upside can also be attributed to contributions from The Warranty Group (TWG) buyout along with lower tax incidence. The Zacks Consensus Estimate for quarterly earnings is pegged at $1 per share versus the year-ago quarter’s loss per share of $1.40.  

Also, continued share buybacks are likely to boost the possible improvement.

On the back of rising interest rates, the company might experience better investment results in the soon-to-be reported quarter. Therefore, owing to an anticipated rise in investment income as well as higher premiums earned, fees and other income, the company is expected to deliver robust revenues in the third quarter. To that end, the consensus mark for the metric is currently pegged at $2 billion, representing a 30.5% surge from the year-ago quarter’s tally.

The company is anticipated to display a strong performance at its Global Lifestyle business in the quarter to be reported. Better-than-expected organic growth and a substantial contribution from the TWG acquisition have mainly led to this probable improvement. Also, the company might have experienced margin expansion owing to a combination of profitable growth and operating efficiencies worldwide.

Further, the top line at Global Lifestyle is likely to improve in the third quarter, fueled by sustained profitable growth in its vehicle protection business, driven by a probable higher sales volume.

With respect to Global Housing, the company is estimated to witnessed better-than-expected results, primarily boosted by probable multifamily housing earnings and revenue growth as well as a favorable loss experience in lender-placed.

The company is likely to generate solid revenues and earnings growth in its multi-family housing business, mainly attributable to the growing number of insured renters (currently having over 1.9 million insured renters).

However, the company might have incurred higher expenses, mainly due to a possible increase in policyholder benefits, selling, underwriting, general and administrative expenses plus interest expense. This in turn, will perhaps weigh on the property and casualty (P&C) insurer’s operating margin expansion.

Also, as a P&C insurer, Assurant is prone to the after effects of catastrophe loss and we expect the third quarter to be no exception. A probable incurrence of catastrophe loss might affect the company’s underwriting performance, thereby rendering volatility to its overall results. Nonetheless, the company’s consistent commitment to excellence in risk management is projected to mitigate a high level of catastrophe loss.

What Our Quantitative Model States

Our proven model does not conclusively show that Assurant is likely to beat on earnings this to-be-reported period. This is because a stock needs to have both a positive Earnings ESP and a favorable Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. But that is not the case here as you will see below.

Earnings ESP: Assurant has an Earnings ESP of 0.00%. This is because both the Zacks Consensus Estimate and the Most Accurate Estimate are pegged at $1 per share. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Assurant, Inc. Price and EPS Surprise


Assurant, Inc. Price and EPS Surprise | Assurant, Inc. Quote

Zacks Rank: Assurant carries a Zacks Rank #3, which increases the predictive power of ESP. However, the company’s 0.00% ESP makes surprise prediction difficult.

We caution against the Sell-rated stocks (#4 or 5) going into an earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks to Consider

Some stocks worth considering from the finance sector with the right combination of elements to exceed estimates this time around are as follows:

National Health Investors, Inc. (NHI - Free Report) is set to report third-quarter earnings on Nov 6 and has an Earnings ESP of +0.24%. The company is a Zacks #2 Ranked player. You can see the complete list of today’s Zacks #1 Rank stocks here.

TCG BDC, Inc. (CGBD - Free Report) has an Earnings ESP of +1.65% and a Zacks Rank of 2. The company is set to release third-quarter earnings on Nov 6.

Prudential Financial, Inc. (PRU - Free Report) has an Earnings ESP of +0.13% and is a #2 Ranked stock. The company is set to announce third-quarter earnings on Nov 7.

Today's Stocks from Zacks' Hottest Strategies

It's hard to believe, even for us at Zacks. But while the market gained +21.9% in 2017, our top stock-picking screens have returned +115.0%, +109.3%, +104.9%, +98.6%, and +67.1%.

And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - 2017, the composite yearly average gain for these strategies has beaten the market more than 19X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation.

See Them Free>>

More from Zacks Analyst Blog

You May Like