CNA Financial (CNA) Q3 Earnings: Is A Beat In The Cards?

We expect property and casualty (P&C) insurer CNA Financial Corporation (NYSE:CNA) to beat expectations when it reports third-quarter results on Oct 31 before the market opens.

Why a Likely Positive Surprise?

Our proven model shows that CNA Financial has the right combination of two key ingredients to beat estimates.

Zacks ESP: Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is +2.38%. This is because the Most Accurate estimate of 86 cents is pegged higher than the Zacks Consensus Estimate of 84 cents. The positive ESP is a meaningful and leading indicator of a likely earnings beat. Please check our Earnings ESP Filter that enables you to find stocks that are expected to come out with earnings surprises.

Zacks Rank: CNA Financial carries a Zacks Rank #2 (Buy). Note that stocks with a Zacks Rank of #1 (Strong Buy), 2 or 3 (Hold) have a significantly higher chance of beating on earnings. The combination of CNA Financial’s Zacks Rank #2 and +2.38% Earnings ESP makes us reasonably confident of an earnings beat.

Conversely, the Sell-rated stocks (Zacks Rank #4 and 5) should never be considered going into an earnings announcement.

Currently, the stock is trading at $35.11. We expect the release to lead to stock movement.

What is Driving the Better-Than-Expected Earnings?

CNA Financial is likely to display growth in net premiums written in the to-be-reported quarter. Better retention, positive rate and a modest level of new business, reflecting the company’s disciplined approach toward the market, are the likely growth drivers.

Moreover, the P&C insurer is likely to experience improved results at its Commercial and Specialty segments in the third quarter.

In addition, the company is expected to record improvement in combined ratio in spite of a tough operating environment. This represents CNA Financial’s superior underwriting discipline.

However, the company is anticipated to witness a decline in net investment income owing to lower limited partnership investments.

With respect to earnings trend, the company delivered positive surprises in three of the last four quarters, but with an average miss of 24.61%. Let’s see how things are shaping up for this announcement.

Stocks to Consider

Here are some companies from the finance sector that you may want to consider as these have the right combination of elements to post an earnings beat this quarter:

RenaissanceRe Holdings Ltd. (NYSE:RNR) , which is set to report third-quarter earnings on Nov1, has an Earnings ESP of +3.59% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Allstate Corporation (NYSE:ALL) has an Earnings ESP of +1.61% and a Zacks Rank #3. The company is slated to report third-quarter earnings on Nov 2.

OM Asset Management plc (NYSE:OMAM) has an Earnings ESP of +3.33% and a Zacks Rank #2. The company is slated to report third-quarter earnings on Nov 2.

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