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The Hartford (HIG) Up 1.8% Since Last Earnings Report: Can It Continue?

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A month has gone by since the last earnings report for The Hartford (HIG - Free Report) . Shares have added about 1.8% in that time frame, outperforming the S&P 500.

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

Hartford Financial's Q1 Earnings Surpass, Rise Y/Y

The Hartford Financial Services delivered first-quarter 2019 adjusted operating earnings of $1.39 per share, beating the Zacks Consensus Estimate by 12%. Moreover, the bottom line improved 9.4% year over year.

This upside was primarily backed by stronger core earnings in Group Benefits and lower Corporate core losses. However, the results were partially offset by Property and Casualty (P&C) and Hartford Funds core earnings.

Total operating revenues came in at $4.94 billion, up 4.6% year over year, supported by net realized capital gains.

Total operating expenses of $4.1 billion dipped 0.2% year over year owing to lower interest expenses.

Quarterly Segment Results

Property & Casualty (P&C) segment’s total revenues of $3.1 billion rose 6% year over year owing to higher revenues from Commercial and Other. The segment witnessed an underwriting gain of $121 million, down 32% year over year.

Group Benefits

Group Benefits’ total revenues of $1.5 billion inched up 2.5% year over year.

Core earnings were $122 million, up 44% year over year, mainly owing to lower disability losses and lower expenses.

The total loss ratio of 74.7% improved 270 basis points (bps) over the year-earlier quarter’s tally on the back of a better group disability loss ratio. However, the same was partially offset by a deterioration in the group life loss ratio.

Hartford Funds

Mutual Funds operating revenues were down 6.6% year over year to $242 million.

Hartford Financial delivered core earnings of $28 million, down 17.6% year over year.

Average AUM was up 2% year over year to $118 billion due to higher market values in first-quarter 2019.

Corporate

Corporate segment operating revenues skyrocketed 546% year over year to $84 million.

The Corporate segment’s core losses of $15 million are narrower than $66 million, incurred in the prior-year quarter. This is mainly because of an increase in other revenues, higher net investment income and lower interest expense.

Financial Update

Book value per share as of Mar 31, 2019 increased 9% to $38.36 from the level on Dec 31, 2018.

Net income return on equity rose 200 bps to 13.5%.

Capital Deployment

The company paid common stock dividends worth $109 million in the first quarter. However, it didnot repurchase any common stock during the first three months of the current year.

The company also announced a $1-billion share buyback authorization, effective through Dec 31, 2020.

How Have Estimates Been Moving Since Then?

It turns out, fresh estimates flatlined during the past month.

VGM Scores

At this time, The Hartford has a great Growth Score of A, though it is lagging a bit on the Momentum Score front with a B. Following the exact same course, the stock was allocated a grade of B on the value side, putting it in the top 40% 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.

Outlook

The Hartford has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.


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