Cincinnati Financial Corp.
) is scheduled to report its second-quarter 2014 results after the
market close on Jul 29.
In the last quarter, this property and casualty insurer delivered a
14.6% negative earnings surprise. However, prior to that, the
company had delivered positive earnings surprises for three
quarters in a row. The average beat for the trailing four quarters
Let's see what factors might have influenced the earnings report
this time around.
Factors Likely to Influence Q2 Results
The company's second-quarter results will be affected by a weakness
in its personal lines insurance in which new business premiums
might have been under pressure. Higher premium rates and greater
precisions in pricing would check premium growth.
Moreover a continuing low interest rate environment might affect
investment income - an important component of Cincinnati
Financial's revenues and net income.
However, increase in renewal rates on the commercial line insurance
will generate higher contribution from the segment.
The company also maintains that strong agent growth will bring in
Moreover, the company's intelligent use of capital by way of share
buyback will aid the bottom line.
Our proven model does not conclusively show that Cincinnati
Financial's is likely to beat the Zacks Consensus Estimate in the
second quarter. That is because a stock needs to have both a
and a Zacks Rank #1 (Strong Buy) or at least 2 (Buy) or 3 (Hold)
for this to happen. But this is not the case here as elaborated
Cincinnati Financial's Most Accurate estimate is pegged at 42 cents
per share, which is in line with the Zacks Consensus Estimate. The
Earnings ESP is thus 0.00%.
Cincinnati Financial has a Zacks Rank #4 (Sell) which lowers the
predictive power of ESP. We caution against stocks with Zacks Rank
#4 and 5 going into an earnings announcement, especially when the
company is seeing negative estimate revisions.
Other Stocks to Consider
Here are some companies you may want to consider as our model shows
that these have the right combination of elements to post an
earnings beat this quarter:
HCC Insurance Holdings Inc. (
) has an earnings ESP of +2.25% and Zacks Rank #2.
AFLAC Inc. (
) has an earnings ESP of +0.63% and a Zacks Rank #2.
Protective Life Corp. (
) has an earnings ESP of +0.83% and a Zacks Rank #3.
Want the latest recommendations from Zacks Investment Research?
Today, you can download 7 Best Stocks for the Next 30 Days.
Click to get this free report
AFLAC INC (AFL): Free Stock Analysis Report
CINCINNATI FINL (CINF): Free Stock Analysis
PROTECTIVE LIFE (PL): Free Stock Analysis
HCC INS HLDGS (HCC): Free Stock Analysis Report
To read this article on Zacks.com click here.