On Jan 16, 2013, we upgraded insurance company
CNO Financial Group, Inc.
) to Outperform. The improved recommendation was based on strong
fundamentals and prospects of significant capital deployment in
Why the Upgrade?
We remain upbeat about the fourth-quarter 2012 earnings of CNO
Financial, with an Earnings Surprise Prediction (ESP) of 4.35%.
The company has consistently outperformed estimates in the last
four quarters, leading to an Average Surprise of 16.72%. ESP is a
leading indicator of an expected positive earnings surprise for
shares. As a result, the company carries a Zacks Rank #2
CNO Financial reported third-quarter 2012 adjusted operating
earnings of 26 cents per share, surpassing the Zacks Consensus
Estimate of 19 cents and year-ago earnings of 16 cents. Revenues
increased 10.1% to $1.1 billion from $0.9 billion in the
prior-year quarter. Total revenue also surpassed the Zacks
Consensus Estimate of $1.03 billion.
The Zacks Consensus Estimate for CNO Financial's
fourth-quarter earnings is 23 cents per share, up 15.7% over the
prior-year quarter. The company's fourth-quarter and full year
2012 financial results are scheduled to release after the closing
bell on Feb 11, 2013.
Apart from a history of outperforming estimates and strong
financial results, CNO Financial has other positives such as
stable credit ratings, strong investment portfolio and declining
expenses. Moreover, the recapitalization in September 2012 has
improved the capital structure and debt maturity profile.
Further, the value of CNO Financial's investment portfolio is
steadily increasing since 2008 and its operating cash flow has
also been strong over the years. Moreover, the company's strong
organic growth and excess capital generation allowed it to
announce a $300 million hike in its share repurchase
authorization in December 2012, after a $100 million hike in
February 2012. CNO Financial is expected to spend $250-$300
million each on share buybacks and dividend payouts in 2013.
Other Stocks to Consider
Some of the other companies, which are performing well in the
insurance sector are
) - Zacks Rank #1 (Strong Buy),
) - Zacks Rank #2 (Buy) and
FBL Financial Group Inc.
) - Zacks Rank #2 (Buy).
(AGESY): ETF Research Reports
CNO FINL GRP (CNO): Free Stock Analysis
FBL FINL GRP-A (FFG): Free Stock Analysis
PRUDENTIAL PLC (PUK): Free Stock Analysis
To read this article on Zacks.com click here.