Loews Corporation (L): New Analyst Report from Zacks Equity Research - Zacks Equity Research Report

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Summary:
We are upgrading Loews to Neutral from Underperform on favorable second quarter results wherein earnings surpassed the Zacks Consensus Estimate as well as year-ago earnings. The quarter witnessed higher earnings at CNA Financial and an increase in parent company investment income driven by improved performance of the trading portfolio. However, lower earnings at Diamond Offshore limited the upside. Loews remains on track to strengthen its hotel business by doubling its hotel count within the next two to four years and expects to triple its net income by 2015. Though Diamond Offshore continues to improve its fleet, a weakening ultra-deepwater and deepwater market will dampen results. Boardwalk remains on track to expand existing pipeline infrastructure as market condition improves. The acquisitions of HP Storage and Louisiana Midstream support its strategy to focus on diversification, to become less dependent on its base gas transportation business. A strong balance sheet with low leverage and adequate cash and strong rating scores are among the positives.

Overview:

Based in New York, Loews Corporation (L) is a diversified holding company. Loews' principal subsidiaries are:

CNA Financial Corporation (CNA), which is the 14th largest property-casualty insurer in the U.S., provides standard commercial lines, specialty lines (specialty property-casualty, professional and financial), surety, marine and other property and casualty coverage as well as life and group insurance coverage. 90.0% of CNA is owned by Loews. This insurance provider contributed 67% of Loews' full-year 2013 revenues.

Diamond Offshore Drilling Inc. (DO), which owns and operates 49 offshore drilling rigs on a contractual basis for oil and gas exploration and production companies. Loews currently owns a 50.4% stake in DO, which accounted for 19% of full-year 2013 revenues.

Boardwalk Pipeline Partners LP (BWP), approximately 66.0% is owned by Loews. Through its subsidiaries, Boardwalk Pipeline is engaged in the operation of interstate natural gas pipeline systems. The company derived 8% of full-year 2013 revenues. Boardwalk Pipeline conducts all of its operations through its three operating subsidiaries Gulf Crossing Pipeline Company LLC, Gulf South Pipeline Company LP and Texas Gas Transmission LLC.

HighMount Exploration & Production LLC, also a wholly owned subsidiary, engaged in natural gas and oil exploration and production operations located in the Permian Basin in Texas, the Antrim Shale in Mich. and the Black Warrior Basin in Ala. In Apr 2010, HighMount sold its exploration and production assets located in the Antrim Shale in Mich. and entered into a definitive agreement with another purchaser to sell its exploration and production assets located in the Black Warrior Basin in Ala. This operation contributed 2% of full-year 2013 revenues.

Loews Hotels Holding Corporation, a wholly owned subsidiary that owns and operates 19 hotels in U.S. and Canada, generated 3% of full-year 2013 revenues.


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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 The NASDAQ OMX Group, Inc.



This article appears in: Investing , Stocks

Referenced Stocks: L , CNA , DO , BWP

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