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Here's Why You Should Retain CNO Financial in Your Portfolio

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CNO Financial Group, Inc. CNO has been gaining traction from its healthy revenue stream, cost control efforts and solid capital position.

Over the past 60 days, the stock has witnessed its 2021 earnings estimates move 1.5% north to $2.03 per share.

The company is well-poised for progress, evident from its favorable VGM Score of A. Here V stands for Value, G for Growth and M for Momentum with the score being a weighted combination of all three factors.

CNO Financial came up with a positive earnings surprise of 12.5%, on average, beating estimates in three of the trailing four quarters and missing in one.

Now let’s see what makes the company an investor favorite.

The company has been consistently taking up efforts to improve agent productivity, and sales and advertising. This, in turn, is expected to improve online customer experience and enhance lead productivity. Last June, the company added a web chat facility to its Colonial Penn website, which will offer customers a unique omnichannel experience.

In the third quarter of 2019, it entered into a new strategic technology partnership with Cognizant and HCL Technologies. With upgrade in technology, CNO Financial now have the accessibility to employer partners, which was missing earlier due to dearth of sophisticated benefits platform offer. In January 2020, the company announced its business transformation to boost cross-channel efficiencies and serve customers better.

CNO Financial’s prudent capital management also impresses. It has been raising its quarterly dividend since 2013. Also, frequent share repurchase programs have been a major capital deployment strategy for the company. It also witnessed a steady cash flow for the past several years. In the first quarter this year, the company returned $99.2 million in the form of share buybacks and dividends (despite the current market instability). This should attract investors’ attention.

The company has been taking up measures to curb costs. In the first quarter, it managed to reduce benefits and expenses 17.7% year over year. The company will pursue further strategic actions to control costs and enrich its earnings profile. Going forward, its expenses are expected to decline on the back of cost-containment program.

However, the company scrapped its 2020 guidance due to current market volatility induced by the COVID-19 pandemic. It expects second-quarter results to be disappointing due to weak sales volumes. It also anticipates earnings for the remaining year to be affected by lower interest rates and an increased pressure on insurance product margin due to the coronavirus.

Shares of this currently Zacks Rank #3 (Hold) company have lost 9.3% in a year’s time, narrower than its industry's decline of 23.2%.

The performance looks decent in comparison to other stock movements in the same space, such as Chubb Limited CB, Aflac Incorporated AFL and American International Group, Inc. AIG, which too have lost 14.1%, 37% and 42.9%, respectively. All these companies presently carry the same Zacks Rank as CNO Financial. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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CNO Financial Group, Inc. (CNO) : Free Stock Analysis Report
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American International Group, Inc. (AIG) : Free Stock Analysis Report
Chubb Limited (CB) : Free Stock Analysis Report
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