On Mar 25, 2013, shares of Allstate Corporation
( ALL ) hit a
52-week high of $49.00. Previously, the company had reported solid
fourth-quarter results with a positive earnings surprise of 942.9%.
Allstate witnessed positive earnings surprises in all the 4
quarters of 2012, with an average beat of 265.98%. Further the
company has been delivering positive earnings surprise for the past
8 quarters.ARCH CAP GP LTD (ACGL): Free Stock Analysis
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On Feb 6, Allstate reported fourth-quarter 2012 operating earnings
per share of 59 cents, which significantly exceeded the Zacks
Consensus Estimate of a loss of 7 cents. However, results lagged
the year-ago quarter's earnings of $1.45 a share.
The company remains focused to mitigate risks and improve
financials. The company initiated an active role in reducing future
catastrophe losses through the establishment of an Enterprise Risk
and Return Management (ERRM) system, which also aided the
improvement of combined ratio in 2012.
Further, in 2012 Allstate's investment portfolio appreciated 1.8%
year over year to $97.28 billion which boosts the operating cash
flow and liquidity.
Allstate has a strong capital management policy. In 2012, the
company deployed $910 million to repurchase 26.7 million shares. In
addition, the company sought to gain investor confidence by
authorizing a $1 billion share repurchase program and a 13.6% hike
in its quarterly dividend to 25 cents from the prior payout of 22
During its fourth-quarter earnings release, Allstate guided its
combined ratio for 2013 to be in the range of 88%-90%. The company
expects to maintain profitability in the auto business and improve
We expect the dividend increment and expanded share buybacks to
bolster Allstate's bottom line going forward. The overall long-term
expected earnings growth rate for this stock is 8.3%.
Valuation looks attractive for Allstate. The shares are trading at
a discount to the peer group average, both on a price-to-book basis
and forward price-to-earnings basis, with return on equity
remaining 15.1% above the peer group average. The 1-year return
from the stock is 49.7%, much above S&P 500's return of
Allstate currently carries a Zacks Rank #2 (Buy). Other stocks in
this industry such as Cincinnati Financial
Corporation ( CINF ), EMC
Insurance Group Inc. ( EMCI ) and
Arch Capital Group Ltd. ( ACGL ) carry a
favorable Zacks Rank #1 (Strong Buy) and appear impressive.