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Loews (L) Q2 Earnings Surpass Estimates, Revenues Rise Y/Y

Zacks Equity Research

Loews Corporation L reported second-quarter 2019 earnings of 82 cents per share, which beat the Zacks Consensus Estimate by 9.3% and increased 13.9% year over year.

The improvement stemmed from higher earnings contributed by CNA Financial CNA and Boardwalk Pipeline, partially offset by lower parent company net investment income and decline in Diamond Offshore DO earnings.

Behind the Headlines   

Operating revenues of $3.6 billion increased 0.8% year over year. Higher insurance premiums and operating revenues and other aided the top line.

Total expenses increased nearly 2% year over year to $3.3 billion on higher insurance claims and policyholders' benefits as well as higher operating expenses.

Book value excluding accumulated other comprehensive income as of Jun 30, 2019 was $64.48 per share, up 3.7% from $62.16 as of Dec 31, 2018.

Loews Corporation Price, Consensus and EPS Surprise

Loews Corporation Price, Consensus and EPS Surprise

Loews Corporation price-consensus-eps-surprise-chart | Loews Corporation Quote

Segment Details

CNA Financial’s revenues increased 2.2% from the prior-year quarter to $2.76 billion. Its reported net loss attributable to Loews Corp. was $249 million, up 3.8% year over year. The quarter witnessed improved results in its Life & Group business, partially offset by lower favorable net prior year reserve development in the Property & Casualty business.

Boardwalk Pipeline’s revenues increased 14.7% year over year to $327 million. Net income increased more than threefold to $53 million. The company witnessed higher earnings from transportation contracts mainly due to growth projects recently placed into service, partially offset by contract restructuring and expirations.

Loews Hotels’ revenues declined 7.5% year over year to $186 million. Income from Loews Corp. was $12 million, down 29.4% year over year. Earnings declined largely due to charges of $7 million related to pre-opening expenses incurred at hotels under development and the write-off of capitalized development costs related to a potential development site.

Diamond Offshore’s revenues plunged 17.3% year over year to $224 million. Net loss attributable to Loews Corp. was $52 million, wider than $37 million loss incurred in the year-earlier quarter. This downside was due to continuing challenging market conditions, higher contract drilling expense due to incremental amortization of certain previously deferred contract-related costs and drilling rig downtime.

Share Repurchase Update

The company bought back 3 million shares for $151 million in the second quarter.  Subsequently, through Aug 2, 2019, it repurchased another 0.4 million shares for $23 million.

Zacks Rank

Loews currently has a Zacks Rank #3 (Hold).  You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Another Insurer

Prudential Financial’s PRU second-quarter 2019 operating net income of $3.14 per share missed the Zacks Consensus Estimate by 2.5%. However, the bottom line increased 4.3% year over year.

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