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Allstate (ALL) to Report Q1 Earnings: What's in the Cards?

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Allstate Corp.’s (ALL - Free Report) first-quarter earnings will be reported on May 2, after the market close. The company is expected to witness an increase in insurance premium written in its property and casualty business, higher revenues from its service business, partly offset by loss due to catastrophe.

Factors Affecting Q1 Results

Allstate’s Property and Casualty business is expected to grow in premium due to increase in pricing, decline in auto claim frequency along with new client growth and higher retention. The company’s use of telematics, analytical expertise, differentiated products and brands is likely to aid business growth. The segment’s premium written has been increasing for past many years. Courtesy of its growth initiatives, premiums written is expected to grow in the first quarter as well.

Allstate’s expansion of its Service business also bodes well for its overall growth. The acquisition of Square Trade, provider of protection plans for mobile phones, consumer electronics and appliances, should drive revenue growth in the first quarter of 2019. SquareTrade became the exclusive protection plan provider for a leading US retailer in the second half of 2018. This contract win is likely to boost revenues from this business.

Another addition to the Service business was InfoArmor, which was acquired in 2018. It led to an increase in policies in force in the last-reported quarter and we expect the same in the to-be-reported quarter.
The company’s disciplined capital management by way of dividend payment and share buyback has also aided bottom-line growth and the same should continue in the first quarter.

However, catastrophe losses might limit Allstate's first-quarter earnings. Total loss for January and February is estimated at around $680 million pretax or $537 million (after tax).

Earnings Surprise History

The company boasts an attractive earnings surprise history, having surpassed estimates in three of the trailing four quarters, with an average positive surprise of 14.5%. This is depicted in the chart below:

The Allstate Corporation Price and EPS Surprise

Why a Likely Positive Surprise

A positive Earnings ESP and a Zacks Rank #3 (Hold) or higher increases the odds of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter . 

Earnings ESP: The Earnings ESP for Allstate is +0.70%.

Zacks Rank: Allstate currently carries a Zacks Rank #3.

Allstate’s positive Earnings ESP when combined with a favorable Zacks Rank makes us reasonably confident of a positive surprise.

Other Stocks That Warrant a Look

Here are some other companies that you may consider as our model shows that these have the right combination of elements to post an earnings beat this quarter:

RenaissanceRe Holdings Ltd. (RNR - Free Report) has an Earnings ESP of +3.29% and a Zacks Rank #2 (Buy).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Sun Life Financial Inc. (SLF - Free Report) has an Earnings ESP of +1.11% and a Zacks Rank #3.

PRA Group, Inc. (PRAA - Free Report) has an Earnings ESP of +0.59% and a Zacks Rank #3.
 

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