Can Hartford Financial (HIG) Beat Earnings Estimates? - Analyst Blog


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The Hartford Financial Services Group, Inc. ( HIG ) is set to report first-quarter 2014 results on April 28, 2014. Last quarter, it posted a 4.44% surprise. Let's see how things are shaping up for this announcement.

Factors This Past Quarter

Hartford Financial has taken a number of steps in the last quarter to improve operational efficiency and strengthen its business. The divestiture of its U.K. Variable Annuity Business on the last day of 2013 is one of the many measures adopted by Hartford Financial to reduce risks in its Talcott Resolution segment.

However, the guidance for 2014-15 (reduction of core earnings by 20%) makes us skeptical about the prospects of this segment. Toward improving its customer service, Hartford Financial launched a training program for new agency professionals in the beginning of the quarter. This was aimed at addressing the unique requirements of small business owners and capitalizing on the vast opportunity provided by this section of the market.

Further, Hartford Financial has been adept in the use of technology to improve operational efficiency. Recently, it collaborated with IT giant, IBM Corporation ( IBM ), to use the cloud-based infrastructure on the latter's PureFlex System to enhance its operations and thereby competitiveness.

Earnings Whispers?

Our proven model does not conclusively show that Hartford Financial is likely to beat earnings this quarter. That is because a stock needs to have both a positive Earnings ESP (Expected Surprise Prediction) and a Zacks Rank of #1, 2 or 3 for this to happen. That is not the case here as you will see below.

Negative Zacks ESP:   That is because the Most Accurate estimate stands at 92 cents per share while the Zacks Consensus Estimate is pegged at 93 cents, making the difference -1.08%.

Zacks Rank #3 (Hold): Hartford Financial's Zacks Rank #3 increases the predictive power of ESP, but when combined with a negative ESP, it makes surprise prediction difficult.

We caution against stocks with Zacks Rank #4 and 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing zero or negative estimate revisions momentum.

Other Stocks to Consider

Here are some other companies you may want to consider as our model shows they have the right combination of elements to post an earnings beat this quarter:  

Radian Group Inc. ( RDN ) with Earnings ESP of +5.00% and Zacks Rank #3.

American International Group Inc. ( AIG ) with Earnings ESP of +0.94% and Zacks Rank #3.

AMER INTL GRP (AIG): Free Stock Analysis Report

HARTFORD FIN SV (HIG): Free Stock Analysis Report

INTL BUS MACH (IBM): Free Stock Analysis Report

RADIAN GRP INC (RDN): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

This article appears in: Investing , Business , Earnings , Stocks
More Headlines for: AIG , HIG , IBM , RDN

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