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Loews (L) Q2 Earnings Miss, Solid Premiums Aid Revenue Rise

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Loews Corporation L reported second-quarter 2018 earnings of 72 cents per share, missing the Zacks Consensus Estimate of 73 cents. The bottom line however, increased 4.3% year over year on lower share count.

Loews Corporation Price, Consensus and EPS Surprise

Loews Corporation Price, Consensus and EPS Surprise | Loews Corporation Quote

The company witnessed lower earnings at Diamond Offshore DO as well as at CNA Financial CNA. However, improved results from the parent company investment portfolio and higher earnings at Boardwalk Pipeline Partners BWP and Loews Hotels limited this downside.

Behind the Headlines

Operating revenues of $3.6 billion increased 8.3% year over year. Rise in insurance premiums and other revenues aided this improvement.

Total expenses increased nearly 9% year over year to $3.3 billion, mainly due to higher contract drilling expenses and other operating costs.

Book value as of Jun 30, 2018 was $59.72 per share, up 3.3% from $57.83 as of Dec 31, 2017.

Segment Details

CNA Financial’s revenues rose nearly 8.8% from the prior-year quarter to $2.6 billion. Its reported net income of $240 million is attributable to Loews Corp., reflecting a slip of 1.6% from the year-ago quarter. This downside in turn, is due to lower realized investment results and increased costs associated with the transition to a new IT infrastructure service provider. However, improvement in underwriting income was a partial offset.

Boardwalk Pipeline’s revenues decreased 10.4% year over year to $285 million. Net income on the back of Loews Corp. soared 166.7% to $16 million, owing to lower tax rate and absence of a one-time item. The prior-year quarter suffered loss on the sale of a processing facility. However, lower transportation revenues from contract restructuring and lower transportation rates due to contract expirations were a partial offset.

Loews Hotels’ revenues improved 11% year over year to $201 million. Income owing to Loews Corp. surged 70% to $17 million, driven by improved results at several owned hotels, primarily the Loews Miami Beach Hotel, slightly higher earnings at joint venture properties as well as lower tax incidence.

Diamond Offshore’s revenues plunged 32.1% year over year to $271 million. Net loss attributable to Loews Corp. was $37 million against income of $7 million earned in the year-earlier quarter. This resulted from lower revenues given the continuing depressed market conditions affecting both rig utilization and average daily revenues.

Share Repurchase Update

The company bought back 5.8 million shares worth $290 million in the second quarter. Subsequently, through Jul 27, 2018, the company repurchased another 1 million shares for $49 million.

Zacks Rank

Loews Corp. has 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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