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Will CNO Financial (CNO) Beat on Q2 Earnings This Season?

Zacks Equity Research

CNO Financial (CNO) is set to report second-quarter 2014 earnings results on Jul 28, 2014. Last quarter, its earnings were in line with the Zacks Consensus Estimate. Let us see how things are shaping up for this announcement.

Factors Affecting the Past Quarter

CNO Financial is well positioned in terms of strong capital deployment and investments in key initiatives that include agent productivity, geographic expansion, product launches, worksite platform distribution as well as enhancing operating efficiencies and customer retention. However, rising expenses are likely to weigh on earnings this quarter.

In addition, decline in capital from the sale of Conseco Life Insurance Company, a subsidiary of CNO Financial will likely deteriorate debt-to-capital ratio.

Earnings Whispers?

Our proven model does not conclusively show that CNO Financial is likely to beat earnings this quarter. That is because a stock needs to have both a positive Earnings ESP (Expected Surprise Prediction) and a Zacks Rank of #1, 2 or 3 for this to happen. That is not the case here as you will see below.

Zacks ESP: CNO Financial has an ESP of 0.00%. This is because the Most Accurate estimate and the Zacks Consensus Estimate both stand at 31 cents per share, making the difference 0.00%.

Zacks Rank: CNO Financial’s Zacks Rank #2 (Buy) increases the predictive power of ESP, but when combined with a zero ESP, it makes surprise prediction difficult.

We caution against stocks with Zacks Rank #4 and 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions momentum.

Other Stocks to Consider

Here are some insurers you may want to consider as our model shows that they have the right combination of elements to post an earnings beat this quarter:  

Arch Capital Group Ltd. (ACGL) has Earnings ESP of +5.10% and a Zacks Rank #2.

AFLAC Inc. (AFL) has Earnings ESP of +0.63% and a Zacks Rank #2.

Cigna Corp. (CI) has Earnings ESP of +2.16% and a Zacks Rank #3 (Hold).

Read the Full Research Report on CNO
Read the Full Research Report on CI
Read the Full Research Report on AFL
Read the Full Research Report on ACGL

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