A month has gone by since the last earnings report for Loews (L). Shares have lost about 5.1% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Loews due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Loews (L) Q3 Earnings Miss Estimates, Revenues Rise Y/Y
Loews Corporation reported third-quarter 2018 earnings of 88 cents per share, missing the Zacks Consensus Estimate of 98 cents by 10.2%. The bottom line, however, skyrocketed 91.3% year over year.
The company witnessed higher earnings at CNA Financial Corporation, Boardwalk Pipeline and Loews Hotels. Soft results at Diamond Offshore and the parent company's investment portfolio were partial offsets.
Behind the Headlines
Operating revenues of $3.6 billion increased 2.5% year over year. Rise in insurance premiums and other revenues aided this improvement.
Total expenses slipped 0.1% year over year to $3.2 billion on lower insurance claims and policyholders' benefits.
Book value as of Sep 30, 2018 was $62.58 per share, up 8.1% from $57.83 as of Dec 31, 2017.
CNA Financial 's revenues rose nearly 7.4% from the prior-year quarter to $2.6 billion. Its reported net income attributable to Loews Corp. more than doubled year over year to $300 million. This upsurge was driven by improved underwriting income, which in turn, was boosted by lower net catastrophe loss for the core property & casualty business and a lower tax rate. However, lower favorable net prior-year reserve development and lower net investment income were partial offsets.
Boardwalk Pipeline 's revenues decreased 7.3% year over year to $279 million. Net income on the back of Loews Corp. soared 64.7% to $28 million owing to lower tax rate as well as full ownership of the business.
Loews Hotels ' revenues improved 17.2% year over year to $190 million. Income from Loews Corp. increased nearly four-fold to $11 million, contributed by improved results at several owned hotels, primarily the Loews Miami Beach Hotel plus higher contributions from its joint venture properties in the Universal Orlando Resort as well as a lower tax incidence.
Diamond Offshore 's revenues plunged 21.4% year over year to $289 million. Net loss attributable to Loews Corp. was $27 million against income of $6 million earned in the year-earlier quarter. This downside is due to lower revenues on persistently depressed market conditions affecting both rig utilization and average daily revenues.
Share Repurchase Update
The company bought back 1.8 million shares worth $88 million in the third quarter. Subsequently, through Nov 2, 2018, it repurchased another 1 million shares for $47 million.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates. The consensus estimate has shifted -27.66% due to these changes.
Currently, Loews has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Loews has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.