The Allstate Corporation
) is set to report its second-quarter 2014 results on Jul 30. Last
quarter, the company delivered a 14.4% positive earnings surprise.
Let's see how things are shaping up for this announcement.
Factors Influencing This Past Quarter
Second-quarter underwriting results will be marred by higher cat
losses that totaled $936 million ($608 million after tax). As a
result, combined ratio is also expected to deteriorate. This in
turn would weigh on company's claims and benefits expenses as well
as cash flow. A higher cat loss will also result in unfavorable
Pricing pressure due to a highly competitive landscape, higher
operating costs as well as sluggishness in Allstate brand home
ownership are expected to limit margin expansion.
Investment returns are also expected to remain low given the soft
interest rate environment.
Our proven model shows that Allstate is likely to miss earnings
estimate this quarter because it has the right combination of two
: Allstate has an
of -11.25%. That is because the Most Accurate Estimate stands at 71
cents while the Zacks Consensus Estimate is higher at 80 cents.
: Allstate has a Zacks Rank #4 (Sell) which lowers the predictive
power of ESP. Also, we should never consider a Zacks Rank #4 or 5
going in to an earnings announcement, particularly 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:
Arch Capital Group Ltd. (
), earnings ESP of +5.10% and a Zacks Rank #2 (Buy).
RenaissanceRe Holdings Ltd. (
), earnings ESP of +1.71% and a Zacks Rank #2.
XL Group plc (
) earnings ESP of +1.20% and a Zacks Rank #3 (Hold).
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XL GROUP PLC (XL): Free Stock Analysis Report
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