It has been about a month since the last earnings report for Allstate (ALL - Free Report) . Shares have added about 6.7% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Allstate due for a pullback? 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.
Allstate Beats Earnings and Revenue Estimates in Q3
Allstate Corporation third-quarter 2019 earnings of $2.84 per share beat the Zacks Consensus Estimate by 12.7% and were up 47% year over year, led by revenue growth.
Revenues of $10.8 billion outpaced the Zacks Consensus Estimate by 19.9%. The top line was up 5.7% year over year, driven by an increase in premiums, investment income, life premiums and contract charges.
Total expenses increased 6.7% year over year to $9.9 billion on higher property and casualty insurance claims, life contract benefits, pension and other post-retirement costs.
The company incurred catastrophe loss of $510 million, down 18% year over year.
Total policies in force as of Sep 30, 2019 were 136.1 million, up 40.7% year over year.
Net investment income of $880 million increased 4.3% year over year.
Solid Segmental Performance
Property-Liability insurance premiums of $9.3 billion increased 5.8% year over year due to rise in premium in Auto, Homeowners as well as Commercial line insurance. The segment’s underwriting income of $737 million was up 45.4% year over year due to reduced operating expenses.
Service Business’ revenues were $418 million, up 27% year over year. This upside was primarily driven by higher contribution from the company’s Protection Plans, Dealer Services and Arity business.
Allstate Life, Benefits and Annuities total premium and contract charges were $625 million, up 2% year over year, driven by higher contribution from Life and Benefits business.
Capital Position (as of Sep 30, 2019)
Total shareholders’ equity was $26.1 billion, up 23% from year-end 2018 level.
Total assets were $121.1 billion, up 7.8% from 2018 year-end level.
The company’s financial leverage position improved with a 120 basis point reduction in debt-to-equity ratio to 20.2%.
Adjusted return on equity of 14.2% was down 270 basis point year over year.
Adjusted book value per share was $63.70, up 4.6% year over year.
Share Buyback and Dividend Buyback
The company returned $775 million to common shareholders in the third quarter of 2019 through a combination of $166 million in common stock dividends and $509 million of share repurchases.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended downward during the past month.
At this time, Allstate has a nice Growth Score of B, a grade with the same score on the momentum front. Charting a somewhat similar path, 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.
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Allstate has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.