A month has gone by since the last earnings report for Allstate (ALL). Shares have lost about 4.7% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Allstate 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.
Allstate Beats on Q2 Earnings and Revenues, Up Y/Y
Allstate Corporation’s second-quarter 2019 earnings of $2.18 per share beat the Zacks Consensus Estimate by 47.3% and were up 15% year over year, led by premium growth, partly offset by catastrophe losses.
Revenues of $10.8 billion outpaced the Zacks Consensus Estimate by 18.9%. The top line was up 7% year over year, driven by an increase in investment income (up 14.3% year over year).
Total expenses increased 7.5% year over year to $10 billion on higher property and casualty insurance claims, life contract benefits, pension and other post retirement costs.
The company incurred catastrophe loss of $1.07 billion, up 18% year over year.
Total policies in force as of Jun 30, 2019 were 129.8 million, up 46.8% year over year.
Net investment income of $942 million increased 14.3% year over year,
Solid Segmental Performance
Property-Liability insurance premiums of $9 billion increased 5.9% year over year due to rise in premium in Auto, Homeowners as well as Commercial line insurance. The segment’s underwriting income suffered from $1.1 billion, up 18% year over year due to catastrophe losses incurred in the reported quarter.
Service Business’ premiums were $350 million, up 18% year over year. This upside was primarily driven by higher contribution from the company’s Square (NYSE:SQ) Trade and Dealer Services business, up 33% and 16.5%, respectively.
Allstate Life’s premiums were $157 million, up 5.3% year over year, driven by higher contribution from traditional life insurance products.
Allstate Benefits’ premiums remained almost unchanged at $256 million.
Capital Position (As of Jun 30, 2019)
Total shareholders’ equity was $24.5 billion, up 15% year over year.
Total assets were $118.4 billion, up 5.5% from 2018 year-end level.
The company’s financial leverage position improved with a 150 basis point reduction in debt-to-equity ratio to 27.9%.
Adjusted return on equity of 17% was up 80 basis point year over year.
Share Buyback and Dividend Buyback
The company returned $664 million to common shareholders in the second quarter of 2019 through a combination of $166 million in common stock dividends and $498 million of share repurchases, which in the settlement of the accelerated share purchase program.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended upward during the past month. The consensus estimate has shifted 7.35% due to these changes.
VGM Scores
Currently, Allstate has an average Growth Score of C, however its Momentum Score is doing a bit better with a B. Charting a somewhat similar path, the stock was allocated a grade of A on the value side, putting it in the top 20% 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.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Allstate has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
The Allstate Corporation (NYSE:ALL
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