A month has gone by since the last earnings report for Allstate (ALL). Shares have lost about 2.4% in that time frame, outperforming 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 catalysts.
Allstate Q1 Earnings Beat Despite Catastrophe Loss
Allstate Corporation first-quarter 2019 earnings of $2.3 per share beat the Zacks Consensus Estimate by 0.44% but decreased 25.3% on a year-over-year basis.
The decrease was mainly due to heavy catastrophe loss. Adjusted revenues came in at $10.33 billion, outpacing the Zacks Consensus Estimate by 15.22%. The top line was up 12.5% year over year, driven by an increase in property and casualty insurance premium (up 6.9% year over year).
In the quarter under review, total expenses increased 10.1% year over year to $9.37 billion on higher property and casualty insurance claims, and operating cost and expenses.
The company incurred catastrophe loss of $680 million, which was 88.4% higher year over year.
Total policies in force as of Mar 31, 2019 were 123.5 million, up 44.3% year over year.
Net investment income of $648 million declined 17.6% year over year due to lower performance-based income.
Solid Segmental Performance
Property-Liability insurance premiums of $8.8 billion increased 6.2% year over year due to rise in premium in auto, homeowners and Ensurance brand.
The segment’s underwriting income of $700 million was down 30.3% year over year due to catastrophe losses incurred in the reported quarter.
Service Businesses’ total revenues were $392 million, up 25% year over year. This upside was primarily driven by higher revenues (up 34.4%) from the company’s Square Trade business, followed by revenue growth of 14.3% and 11.5% respectively, in Arity and Allstate Dealer Services.
Allstate Life’s total revenues of $486 million increased 3% year over year, driven by growth in premiums and net investment income.
Allstate Benefits’ total revenues grew 2.6% year over year to $311 million, driven by growth in premium and gains from realized capital losses.
Allstate Annuities’ revenues of $349 million grew 32% year over year mainly due to high realized capital gains.
Capital Position (As of Mar 31, 2019)
Total shareholders’ equity was $20.5 billion, down 1.4% year over year.
Total assets were $115.8 billion, up 2.3% year over year.
Long-term debt of $6.45 billion decreased 5.8% year over year.
Ratio of debt-to-equity was 27.6%, down 180 basis points year over year.
Adjusted return on equity of 13.5% declined from 16.2% in the year-ago quarter.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates.
Currently, Allstate has a subpar Growth Score of D, however its Momentum Score is doing a bit better with a C. Charting a somewhat similar path, 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 C. 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. Notably, Allstate has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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