For Immediate Release
Chicago, IL – February 25, 2020 – Zacks Equity Research Shares of CNA Financial Corp. CNA as the Bull of the Day, The Mosaic Company MOS asthe Bear of the Day. In addition, Zacks Equity Research provides analysis on United Airlines Holdings UAL, Chase Credit Card Services JPM and Visa V.
Here is a synopsis of all five stocks:
Bull of the Day:
CNA Financial Corp.ended 2019 on a high note and analysts are bullish about 2020. This Zacks Rank #1 (Strong Buy) is expected to grow 2020 earnings by the double digits.
CNA is one of the largest commercial property and casualty insurance companies in the United States. It operates in the US, Canada and Europe and has approximately $45 billion in assets.
Another Beat in the Fourth Quarter
On Feb 10, CNA reported its fourth quarter 2019 results and beat the Zacks Consensus by $0.06.
Earnings were $0.97 compared to the Consensus of $0.91.
The company said that underwriting was strong in the quarter. It's Property & Casualty Operations combined ratio for the fourth quarter was 95.6% and the underlying combined ratio was 94.9%.
Fourth quarter premium rates rose to 7% and gross premiums jumped to 8%.
Full Year Estimates Rise
Given the optimism, it's not surprising that the analysts raised 2020 and 2021 earnings estimates after the report.
The 2020 Zacks Consensus rose to $4.13 from $3.87 in the last month. That's an earnings gain of 15% as CNA made just $3.59 in 2019.
But analysts are also bullish about 2021. The 2021 Zacks Consensus jumped to $4.28 from $3.35 over the same period. That's another 3.6% earnings growth.
Safety in 2020?
CNA's stock has been treading water since 2017.
But in 2020, it's up 3.8%, outperforming the S&P 500.
CNA is attractively priced with a forward P/E of just 11.5.
Investors also get a dividend, currently yielding 3.1%, for their patience.
For investors looking for an insurance play during this volatile time, CNA is one to keep on the short list.
Bear of the Day:
The Mosaic Companycontinues to see a challenging environment in the fertilizer industry. This Zacks Rank #5 (Strong Sell) recently missed big on fourth quarter earnings but are their glimmers of hope to start 2020?
Mosaic makes concentrated phosphate and potash crop nutrients. It is a single source provider of phosphate and potash fertilizers and feed ingredients for the global agriculture industry.
Third Miss in a Row in the Fourth Quarter
On Feb 19, Mosaic reported its fourth quarter and full year 2019 results. It's a year the company would rather forget.
It missed on earnings for the third quarter in a row, reporting a loss of $0.28 compared to the Zacks Consensus Estimate of a loss of just $0.01.
In Q4, the problems of the full year continued. From the company's earnings press release:
"The Chinese market continued to use potash inventories to fulfill their needs; drought and fires significantly impacted Australian agriculture; and farmers in North America were impacted by a shortened fertilizer application season due to delayed planting and harvesting of the prior season’s crop and poor fall weather."
"With less fertilizer applied, producers and distributors continued to carry high inventories in many markets, resulting in the need for producers to curtail supply of both potash and phosphates," the press release stated.
Improvement to Start 2020
However, while 2019 was an awful year, the company has seen some improvement in conditions in December and January to start the year.
And whereas the coronavirus was having a negative impact on many industries, in fertilizers, it's actually boosting global phosphate prices.
Global inventories are falling and the market is tightening. Mosaic has seen more than a $65 per tonne improvement in price from the lowest priced sales in December to those recently booked in February 2020.
Much of the phosphate production in China is in Hubei province, which is mostly shutdown due to the coronavirus. The decline in supply, as well as limited new capacity elsewhere in the world, is expected to lead to a tightening of the global phosphate market.
In potash, the market is coming into balance after supply was cut in 2019.
Mosaic said buyer activity has stalled in anticipation of a China contract, which typically sets a benchmark for global prices.
However, they expect strong demand in the Northern Hemisphere for the spring planting season, followed by a surge in activity in the Southern Hemisphere in the third quarter.
Estimates Still on the Decline
Despite the upbeat sentiment, the 2020 Zacks Consensus Estimate is still on the decline.
Over the last 60 days it has fallen to $0.85 from $1.25 as two analysts cut during that time.
That's still a big improvement from the $0.19 the company made in 2019, but the cuts are what give the stock the Strong Sell Rank.
Have Shares Finally Bottomed?
Shares are trading near 3-year lows and are down 27.4% over the past 2 years.
They're not real cheap on a P/E basis, however. They trade with a forward P/E of 22.6. But it is normal to see a higher P/E at the bottom of the cycle in a commodity business.
Mosaic is shareholder friendly, with a dividend currently yielding 1% for your troubles.
Fertilizer competitorNutrien is also a Zacks Rank #5 (Strong Sell) so the cuts in the estimates are industry-wide.
But investors interested in the fertilizer companies, should be watching those estimates for when they start to turn in the right direction: up.
United Extends Association with Chase, Visa
In a customer-friendly move, United Airlines, the wholly-owned subsidiary of United Airlines Holdings, inked a deal with two major credit card companies, namely Chase Credit Card Services and Visa. This new agreement, valid through 2029, signals the continuation of the long-standing partnership (more than three decades) between the three involved parties.
Management stated that the new pact via which the carrier’s MileagePlus credit card program is extended, will provide it with an additional $400 million in the ongoing year. However, other financial aspects of the deal have been kept under wraps.
By stretching its association with the two visa companies, United Airlines not only took a step toward enhancing its cardholders’ travel experience but also offered them more opportunities to earn and redeem miles.
Moreover, the carrier is making constant efforts to make its MileagePlus scheme the most sought-after loyalty program for its members. For instance, last year, the airline announced that MileagePlus miles never expire. Additionally, in July 2019, it declared its partnership with CLEAR, a secure identity company that uses biometrics for building a frictionless and secure world to ease the travel experience for members of the credit card program.
Notably, co-branded card alliances are quite common in the airline space and contribute handsomely to an airline’s top line. For instance, Delta anticipates its deal with American Express to contribute approximately $7 billion to its top line (on an annual basis) by 2023.
United Airlines carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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Click to get this free report JPMorgan Chase & Co. (JPM) : Free Stock Analysis Report CNA Financial Corporation (CNA) : Free Stock Analysis Report Visa Inc. (V) : Free Stock Analysis Report United Airlines Holdings Inc (UAL) : Free Stock Analysis Report The Mosaic Company (MOS) : Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research