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Whats's in the Cards for Allstate's (ALL) Earnings in Q2?

The Allstate Corp. ALL is scheduled to report second-quarter earnings on Aug 4, after market close. The company’s earnings as well as revenues are expected to have declined year over year.

In the last reported quarter, Allstate’s earnings surpassed the Zacks Consensus Estimate by 13.46%, led by increased premiums and policies in force.

Q2 Earnings & Revenue Expectations   

The Zacks Consensus Estimate for Allstate’s second-quarter earnings of $1.41 per share implies a 35.32% decrease from the prior-year quarter’s reported number. Likewise, the consensus estimate for sales of $10.8 billion suggests a 0.61% dip from the year-ago quarter’s reported figure.

Factors at Play

Allstate’s results are likely to reflect accretion from the long-term strategic goals of better serving its customers, growing the customer base and achieving target returns on capital. The company has a significant number of strengths in property liability that drive its competitiveness, such as pricing sophistication, claim expertise, a broad product portfolio and a wide distribution platform.

The company’s earnings results are expected to reflect strong profitability in auto and homeowners insurance.  In the auto insurance business, it is likely to have gained from a decline in auto accident claims due to fewer driving as Americans remain at home in the wake of the coronavirus outbreak.

Policies-in-force are likely to have risen, aided by growth in Allstate insurance brands. Allstate protection plan, formerly known as SquareTrade, is likely to have sustained its rapid growth momentum on the back of a recently added major retail partner.

Also, Service business is expected to have recognized solid revenues, which the company has been keenly expanding in recent years with a host of acquisitions.

On the flip side, the company is likely to have incurred $1.19 billion ($937 million in pre-tax) catastrophe losses from weather-related occurrences in April, May and June. These losses are likely to have drained the company’s underwriting profits.

Investment income might also have declined due to lower limited partnership income and weak investment yields.

In addition, Allstate’s investments in technology and marketing are likely to have flared up operating expenses, partially offset by its cost-control initiatives.

Earnings Surprise History

The company boasts an attractive earnings surprise history with bottom-line outperformances in all the trailing four quarters, the average being 2.92%. This is depicted in the chart below:

The Allstate Corporation Price and EPS Surprise

The Allstate Corporation Price and EPS Surprise

The Allstate Corporation price-eps-surprise | The Allstate Corporation Quote

Here is what our quantitative model predicts:

Our proven model predicts an earnings beat for Allstate this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of beating estimates. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Earnings ESP: Allstate has an Earnings ESP of +11.48%.
Zacks Rank: Allstate currently has a Zacks Rank #3.

Other Stocks to Consider

Some other stocks worth considering from the insurance industry with an apt combination of elements to also surpass estimates this reporting cycle are as follows:

American Financial Group Inc. AFG has an Earnings ESP of +21.45% and a Zacks Rank of 3currently. You can see the complete list of today’s Zacks #1 Rank stocks here.

MetLife Inc. MET has an Earnings ESP of +2.51% and is presently Zacks #3 Ranked.

Sun Life Financial Inc. SLF has an Earnings ESP of +1.22% and a Zacks Rank of 3 at present.

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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 Nasdaq, Inc.

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