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Will Increase in Premiums Aid Allstate (ALL) Q4 Earnings?

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The Allstate Corp. (ALL - Free Report) is scheduled to report fourth-quarter earnings on Feb 4, after market close. The company’s earnings and revenues are expected to have improved year over year.

In the last reported quarter, Allstate’s earnings surpassed the Zacks Consensus Estimate by 12.7% due to increase in premiums, partly offset by catastrophe losses.

Factors at Play

Allstate’s Property liability results are likely to show an increase in premiums policy led by growth in the Allstate and Esurance brands, and higher average premium for auto and homeowners insurance across all three underwritten brands namely Allstate, Esurance and Encompass.

In the Service business, we expect to see increased number of consumers with higher policies in force. Revenues in the segment are expected to have been aided by growth in Allstate protection plans and Allstate dealer services, as well as the acquisition of Allstate identity protection last year.

The company’s disciplined capital management by dividend payout and share buyback is likely to have driven bottom-line growth in the fourth quarter.

Weather related losses are likely to have weighed on Allstate's fourth-quarter underwriting margins. Total loss for the quarter under review is estimated to be $295 million pre-tax and $233 million after-tax.

The company estimates a charge of $51million pre-tax, or $40 million after-tax related to impairment of the Esurance trade name intangible asset from the 2011 acquisition.

Allstate previously disclosed a $37 million charge in the quarter under review in relation to the original issuance costs from the redemption of fixed-rate noncumulative perpetual preferred stock on Oct 15, 2019.

Earnings Surprise History

The company boasts an attractive earnings surprise history, having surpassed estimates in the trailing four quarters, with a positive surprise of 20.8%, on average. This is depicted in the chart below:

The Allstate Corporation Price and EPS Surprise

Here is what our quantitative model predicts:

 

Our proven model predicts an earnings beat for Allstate this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances 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: Allstate has an Earnings ESP of +2.01%.

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

Other Stocks to Consider

Some other stocks from the insurance industry with the apt combination of elements to surpass estimates this reporting cycle are as follows:

RenaissanceRe Holdings Ltd. (RNR - Free Report) has an Earnings ESP of +18.32% and a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank stocks here.


Lincoln National Corporation (LNC - Free Report) has an Earnings ESP of +0.54% and a Zacks Rank of 2.

MetLife, Inc. (MET - Free Report) has an Earnings ESP of +0.57% and a Zacks Rank of 2.

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