On Dec 16, 2013, shares of
CNA Financial Corporation
) hit a 52-week high of $41.95. The momentum was driven by the
company's favorable operating results so far this year, backed by
a steady financial and operational profile.
CINCINNATI FINL (CINF): Free Stock Analysis
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CNA Financial has shown strong operating results for all three
quarters of the year, with an average earning surprise of 23.3%.
The company is benefiting from benign catastrophe loss this year
compared to last year, which has saved a huge cash amount that
would otherwise have been paid to settle claims.
The company is also benefiting from improving fundamentals of the
insurance industry. Margin improvement and favorable rate
movement are set to boost the company's results.
An increase in interest rates is also expected to have a
favorable effect on earnings going forward.
CNA Financial carrying a Zacks Rank #1 (Strong Buy) boasts of
solid asset quality, and overall sound capital position,
liquidity and financial flexibility, which drives credit rating
agencies to give it a strong credit score.
A look at the earnings estimates also provides evidence that the
stock has been gaining popularity among the analysts. All
the estimates on the company have gone higher in the past 60
days, with not a single estimate going lower. This has pushed the
Zacks Consensus Estimate consensus sharply higher too, with 2013
earnings up 10% to $3.42 per share. For 2014 also, all the
estimates moved north pushing the estimates up by 6.0% to $3.40
Valuation for CNA Financial looks reasonable. The shares are
trading at 14.2% discount to the peer group average both on a
forward price-to-earnings basis and 40% discount to a
price-to-book basis. Return on equity is 32% lower than the peer
group average. However, the year-to-date return from the stock
was 47.2%, much above the S&P's return of 25.3%.
Some other stocks in the property and casualty industry include
Cincinnati Financial Corp.
) and E
ndurance Specialty Holdings Ltd.
). All these carry the same Zacks Rank as CNA Financial and
are worth considering.