Auto and home insurer -
) is scheduled to release first-quarter 2014 financial results
after the closing bell on May 6.
In the last reported quarter, Allstate had delivered a
positive earnings surprise 23.2%. The company posted an earnings
beat in the trailing four quarters with an average surprise of
13.2%. Let us see how things are shaping up for this
Factors at Play
Over the past couple of quarters, Allstate has been focusing
on minimizing market risk and maximizing returns by capitalizing
on its industry-leading position, diversified mix, pricing
discipline and divestment of Lincoln Benefit Life Co. (LBL),
which will expectedly generate incremental synergies and
Moreover, lower catastrophe losses, improvement in rates and
synergies from agency expansions in the past few quarters score
well with the ratings agencies and boosted shareholder
confidence. These are also reflected by improved fundamentals and
efficient capital deployment comprising a 12% dividend hike in
Feb 2014 and accelerated share buybacks.
On the one hand, Allstate's interest risks on investment
portfolio, loss on disposition of LBL higher operating expenses
and stiff competition raise caution on the stock going forward.
However, prudent capital management, comprehensive enterprise
stochastic model as well as modest operating and financial
leverage will likely aid Allstate to adapt to the changing market
Our proven model shows that Allstate is likely to beat
earnings as it ensures the required combination of two key
: Allstate has a positive Zacks ESP. That is because Expected
Surprise Prediction or
, which represents the difference between the Most Accurate
estimate of $1.15 per share and the Zacks Consensus Estimate of
$1.14, is +0.88%.
: Allstate has a Zacks Rank #3 (Hold). Note that stocks with
Zacks Rank #1, 2 and 3 have significantly higher chances of
beating earnings. Conversely, Sell-rated stocks (#4 and 5) are
kept under the radar and are never considered going into the
earnings announcement, especially when the company is witnessing
negative estimate revisions momentum.
The combination of Allstate's Zacks Rank #3 and +0.88% ESP
raise the prospect of an earnings beat on May 6.
Other Stocks to Consider
Here are some other stocks you may want to consider as our
model shows they have the right combination of elements to post
an earnings beat this quarter:
NRG Yield Inc.
) with an earnings ESP of +23.53% and a Zacks Rank #2 (Buy).
) with an earnings ESP of +1.55% and a Zacks Rank #3.
CST Brands Inc.
) with an earnings ESP of +14.29% and a Zacks Rank #3.
ALLSTATE CORP (ALL): Free Stock Analysis
CST BRANDS INC (CST): Free Stock Analysis
HUMANA INC NEW (HUM): Free Stock Analysis
NRG YIELD INC-A (NYLD): Free Stock Analysis
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