It has been about a month since the last earnings report for CNO Financial Group, Inc. (NYSE:CNO) . Shares have lost about 4% in that time frame.
Will the recent negative trend continue leading up to its next earnings release, or is CNO 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.
CNO Financial’s Q4 Earnings Surpass Expectations
CNO Financial’s fourth-quarter 2017 adjusted earnings of 61 cents per share surpassed the Zacks Consensus Estimate by 48.8%. The bottom line also improved 74.3% year over year on higher revenues.
Including the one-time unfavorable impacts of the Tax Reform Act, the company reported net loss 42 cents per share in the fourth quarter. This compares unfavorably to net income of $1.34 per diluted share, in the year-ago quarter.
CNO Financial’s total revenues increased 8.4% year over year to $1,090 million in the fourth quarter.
Full-Year Update
Excluding theone-time unfavorable impacts of the Tax Reform Act, the company reported adjusted earnings of $2.02 per share for 2017. This beats Zacks Consensus Estimate of $1.65.
The company’s total revenues came in at $4.3 billion for 2017 that grew 7.8% year over year.
Quarterly Operational Update
Total collected premiums were $940.9 million, down 1% from the prior-year quarter.
New annualized premiums for life and health products amounted to $85.4 million, down 5% from the year-ago quarter.
First-year collected premiums totaled $357.3 million, down 5% from the last-year quarter.
Quarterly Segment Update
Bankers Life
Total collected premiums were $696.3million, down 2% year over year.
New annualized premiums for life and health products decreased 9% year over year to $43.5million.
Pre-tax operating earnings of of $109.7 milliondeclined 21% from the last-year quarter.
Washington National
Total collected premiums of $168.6 were up 2% year over year.
New Annualized premiums from life and health products were $27.1 million, up slightly from the last-year quarter.
Pre-tax operating earnings were down 21% year over year.
Colonial Penn
Total collected premiums were $72 million, up 3% year over year.
New annualized premiums were $14.8 million, up slightly from the year-ago quarter.
The pre-tax operating earnings were $5.9 million, up from $4.6 million in the prior-year quarter.
Long-Term Care in run-off
Total collected premiums were $4 million, down from $4.7 million in the year ago quarter.
The long-term care business was recaptured in September 2016. This segment recognized pre-tax earnings of $0.6 million in the fourth quarter, as against the loss of $3.9 million in the year-ago quarter.
The company expects this segment to report normalized earnings before net realized investment gains (losses) of approximately breakeven over the long term.
Corporate Operations
The segment includes performance of the investment advisory subsidiary and corporate expenses.
Pre-tax loss was $3.3 million in the fourth quarter, narrower than a loss of $23 million in the year-ago quarter. This was primarily due to favorable investment returns and lower expenses.
Financial Update
Unrestricted cash and investments held by CNO Financial’sholding company were $397 million at Dec 31, 2017, up 5% from year-end 2016.
Book value per common share increased to $29.05, up from $25.82 at the end of 2016. Book value per diluted share, excluding accumulated other comprehensive income, increased to $21.43, down from $22.02 as of Dec 31, 2016.
Debt-to-capital ratio was 15.9% as of Dec 31, 2017, compared to 16.9% at the end of 2016.
Securities Repurchase and Divided Update
During the quarter, the company repurchased $27 million of common stock.
During 2017, it bought back shares worth of $167.1 million.
As of December 31, 2017, the company has 166.9 million shares outstanding and had authority to buyback up to an additional $385.6 million of common stock.
During the fourth quarter, dividends paid on common stock totaled $15.1 million.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimate. There has been one revision lower for the current quarter.
CNO Financial Group, Inc. Price and Consensus
VGM Scores
At this time, CNO has a subpar Growth Score of D, however its Momentum is doing a lot better with an A. Following the exact same course, the stock was also allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.
Overall, the stock has an aggregte VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Zacks' style scores indicate that the company's stock is suitable for value and momentum investors.
Outlook
Estimates have been broadly trending downward for the stock and the magnitude of this revision looks promising. Interestingly, CNO has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
CNO Financial Group, Inc. (CNO): Free Stock Analysis Report
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