We retain our Neutral recommendation on
) following mixed second quarter earnings results.
On Jul 29, Loews Corporation reported its second quarter 2013
operating net income of 71 cents per share. Results fell short of
the Zacks Consensus Estimate by 2.7% but surged 51% year over
year. Higher parent company investment income drove the
improvement. However, lower earnings at Diamond Offshore limited
the upside. The multiline insurer managed to deliver positive
earnings surprise in 2 of the last 4 quarters with an average
beat of -5.3%.
Nevertheless Loews remains focused on strengthening its hotels
business, which is the company's smallest unit. With capital at
its disposal to acquire and develop property, the company intends
to seek opportunities in Boston, Chicago, San Francisco,
Washington, D.C., New York City, Dallas, Toronto and Seattle, in
order to add assets to its portfolio. Loews aims to take the
count from 18 to more than 30 in the next two to four years,
besides tripling its net income by 2015.
Also, to diversify its operations, Loews entered into a joint
venture with Boardwalk Pipeline Partners. It will foray into the
natural gas liquids business and capitalize on the opportunities
offered by the market.
Additionally, in June, Standard & Poor's upgraded CNA
Financial's financial strength rating from A- to A, reflecting
its solid capital position and earnings.
On the tepid side,
) results in the upcoming quarters will remain depressed as it
will experience a greater number of surveys resulting in more
planned downtime. Also, contracted backlog in 2013 will restrict
Diamond Offshore from capitalizing on strong demand in
ultra-deepwater and deepwater markets in the near term.
Concurrently, HighMount continues to generate lower revenues and
income due to lower sales volume stemming from lower drilling
activity as well as a decline in natural gas prices.
Loews currently carries Zacks Rank #4 (Sell).
Other stocks to consider
While we prefer to remain cautious on Loews, other multi-line
FBL Financial Group Inc
) both carry favorable Zacks Rank #1 (Strong Buy) and appear
DIAMOND OFFSHOR (DO): Free Stock Analysis
FBL FINL GRP-A (FFG): Free Stock Analysis
KEMPER CORP (KMPR): Free Stock Analysis
LOEWS CORP (L): Free Stock Analysis Report
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