On March 21, 2014, shares of
The Allstate Corporation
) touched a 52-week high of $56.41. The momentum was driven by
solid earnings results and capital deployment plan. The share
price has gained almost 13.7% since the company reported its
results on Feb 5.
The fourth-quarter earnings figure at Allstate clocked a positive
surprise beat of 23.2% while the top line exceeded the Zacks
Consensus Estimate by 2.4%. This carries forward the company's
impressive earnings performance wherein it delivered positive
earnings surprises in each of the last 4 quarters, with an
average beat of 13.2%.
The solid fourth-quarter performance primarily accounts for
higher premiums, lower catastrophe losses and better underwriting
results, all of which boosted operating income across segments,
operating cash flow, return on equity and book value per share.
With respect to returning value to shareholders, in 2013,
Allstate bought back shares for $1.84 billion in 2013,
significantly up from $910 million in 2012. Thereafter, on Feb
19, the board of Allstate sanctioned a new share repurchase
program worth $2.5 billion to be executed in the next one and a
half years. This sanction is the largest one since 2006.
The board also hiked its regular quarterly dividend by 12% to
28 cents per share. The company's sturdy capital deployment
reflects its efficient operational synergies, yield expansion and
aggressive risk management. Since 2011, Allstate has returned
over $1 billion in capital to its shareholders.
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The year-to-date return from the stock came in at 2.79%, way
ahead of the S&P's return of 0.98%. The expected long-term
earnings growth rate for the stock is 9%.
Allstate presently carries a Zacks Rank #3 (Hold). Some
better-ranked property and casualty insurers worth considering
AmTrust Financial Services, Inc
Atlas Financial Holdings, Inc
). All these stocks sport a Zacks Rank #1 (Strong Buy).