On Jan 23, Zacks Investment Research upgraded CNA Financial Corp. (CNA) by a notch to a Zacks Rank #1 (Strong Buy).
Why the Upgrade?
CNA Financial has been riding on a strong growth momentum ahead of its fourth-quarter and full-year 2013 results, which are slated to release on Feb 10, 2014. The growth impetus stems from improved core fundamentals throughout 2013, which are cushioned by strong operating leverage and a modest capital position.
CNA Financial also outperformed the one-year S&P 500 index, which posted an increase of 24.1% against a return of 42% clocked by the company. Additionally, this global property and casualty (P&C) insurer delivered positive earnings surprises in the straight last three quarters, with an average beat of 23.3%.
On Oct 28, CNA Financial reported third-quarter 2013 operating earnings per share of $1.00, which outpaced the Zacks Consensus Estimate of 76 cents by 31.6% and the year-ago quarter number of 80 cents by 25%.
Higher premiums and lower catastrophe losses improved the combined ratio and bottom line across both P&C and specialty segments. Higher rates and improved underwriting efficiency are further expected to drive the results in the upcoming quarters. Strong expense, risk and claims administration along with effective credit management score well with the investors and ratings agencies.
CNA Financial has been experiencing rising earnings estimates following its robust third-quarter results and a strong outlook affirmed by ratings agencies. The Zacks Consensus Estimate for 2013 moved north by 2.7% to $3.45 per share in the last 60 days. The estimate for fourth-quarter 2013, in particular, shot up 4.9% to 85 cents a share.
Moreover, the Most Accurate estimate for CNA Financial’s 2013 earnings stands at $3.63 a share, resulting in an Earnings ESP of +5.2%.
Further, the estimate for 2014 rose 0.9% to $3.40 over the same 60-day period. No downward revision in estimates was witnessed for either year.
Other Stocks to Consider
Other top-ranked insurers in the industry include PartnerRe Ltd. (PRE), Aspen Insurance Holdings Ltd. (AHL) and Endurance Specialty Holdings Ltd. (ENH). All these stocks carry the same Zacks Rank as CNA Financial.