We expect property and casualty insurer
The Chubb Corporation
) to beat expectations when it reports second-quarter 2014 results
on Jul 24.
Why a Likely Positive Surprise?
Our proven model shows that Chubb is likely to beat earnings this
quarter because it has the right combination of two key
, which represents the difference between the Most Accurate
estimate and the Zacks Consensus Estimate, is +0.53%. This is a
meaningful an leading indicator of a likely positive earnings
surprise for shares.
Chubb carries a Zacks Rank #3 (Hold). Note that stocks with Zacks
Ranks of #1, 2 and 3 have a significantly higher chance of beating
earnings. The Sell-rated stocks (#4 and 5) should never be
considered going into an earnings announcement.
The combination of Chubb's Zacks Rank #3 and +0.53% ESP makes us
confident of a positive earnings beat on Jul 24.
What is Driving the Better-than-Expected Earnings?
A low-growth competitive pricing environment and the company's
focus on protecting its underwriting profitability and returning
capital to shareholders will be the key drivers of earnings in the
to-be reported quarter.
The company writes premium through three segments - Commercial,
Personal and Specialty Insurance. As far as premium growth is
concerned, the Commercial segment is expected to give a weak
performance, with higher contribution expected only from its
workers' compensation line of business. Personal insurance is
expected to drive top-line growth as its rate environment was
healthy. Premium growth in the Specialty Insurance segment which
provides professional liability and surety insurance is expected to
disappoint, as Chubb was conservative in writing new business in
However, a benign catastrophe season will provide an extra cover to
the company's earnings.
Chubb's earnings are also expected to benefit from its disciplined
capital management strategy which includes share buyback and
dividend payment. The positive trend is seen in the trailing
four-quarter average earnings beat of 14.1%.
Other Stocks to Consider
Here are some other companies you may want to consider as our model
shows that these have the right combination of elements to post an
earnings beat this quarter:
Everest Re Group Ltd.
), Earnings ESP of +6.01% and a Zacks Rank #2 (Buy).
Arch Capital Group Ltd.
), Earnings ESP of +5.10% and a Zacks Rank #2.
Allied World Assurance Company Holdings, AG
), Earnings ESP of +3.8% and a Zacks Rank #3.
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CHUBB CORP (CB): Free Stock Analysis Report
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ALLIED WORLD AS (AWH): Free Stock Analysis
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