ProAssurance (PRA) to Post Q2 Earnings: What's in the Cards?
ProAssurance Corporation PRA is slated to report second-quarter 2023 earnings on Aug 8, after the closing bell. The company’s earnings missed estimates in the last reported quarter.
What do the Estimates Say?
The Zacks Consensus Estimate for second-quarter earnings per share (EPS) of 8 cents indicates a 73.3% decrease from the year-ago quarter’s reported EPS of 30 cents. The consensus estimate has witnessed no movement in the past week.
The Zacks Consensus Estimate for second-quarter revenues is pegged at $265.4 million, suggesting a fall of 3.3% from the year-ago quarter’s reported figure.
ProAssurance’s earnings beat estimates in two of the trailing four quarters, while it missed on the other occasions, the average being 4.6%. This is depicted in the graph below.
ProAssurance Corporation Price and EPS Surprise
ProAssurance Corporation price-eps-surprise | ProAssurance Corporation Quote
Before we get into what to expect for the to-be-reported quarter in detail, it is worth looking at PRA’s first-quarter performance.
Q1 Earnings Rewind
In the first quarter, this property and casualty insurance reported adjusted operating loss of 15 cents per share, missing the Zacks Consensus Estimate of EPS of 15 cents. Cost headwinds prevailing amid the medical professional liability market affected the first-quarter results. Nevertheless, the downside was partly offset by growing net investment income and a declining expense level.
Now let’s see how things have shaped up prior to the second-quarter earnings announcement.
Factors to Note
The Zacks Consensus Estimate for net premiums earned indicates a 2.4% year-over-year decline. Our estimate also suggests a year-over-year decline this time around. Competitive pressures and PRA’s re-underwriting efforts are likely to have affected the top line.
The consensus mark for combined ratio is pegged at 109%, while our estimate predicts 109.9% compared with the year-ago level of 103%. A higher combined ratio suggests that the company has less premium left after claim settlements. This is expected to have positioned the company for a year-over-year decline, making an earnings beat uncertain.
The bottom line of the company is likely to have suffered a setback due to escalating underwriting, policy acquisition and operating expenses and dividend expense. Our estimate for the underwriting expense ratio suggests 289 basis points deterioration from the year-ago figure to 34.2%. The company expects an increase in expense ratio in the upcoming quarters due to the timing of general expenses.
The consensus mark for Specialty P&C Segment revenues predicts a 6.5% decline from a year ago, while our estimate also suggests a year-over-year decline. This reflects the loss of business due to rate increases and highlights the company’s focus on walking away from businesses which are not adequately priced. Further, the Zacks Consensus Estimate for Workers’ Compensation Insurance revenues indicates a 0.9% year-over-year fall.
The negatives are expected to have been partially offset by higher investment income, thanks to the high-interest rate environment. The Zacks Consensus Estimate for net investment income indicates a 34.5% year-over-year increase, while our estimate also suggests year-over-year growth.
Earnings Whispers
Our proven model does not conclusively predict an earnings beat for ProAssurance this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. This is not the case here, as you will see below.
Earnings ESP: The company has an Earnings ESP of -62.5%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: ProAssurance currently carries a Zacks Rank #2.
Stocks to Consider
Here are some companies from the broader Finance space that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this time around:
Forge Global Holdings, Inc. FRGE has an Earnings ESP of +11.11% and is a Zacks #3 Ranked player.
The Zacks Consensus Estimate for Forge Global’s EPS for the to-be-reported quarter suggests an improvement of 64.5% from the year-ago period. The estimate remained stable over the past week. The consensus mark for FRGE’s revenues is pegged at $16.4 million.
American Equity Investment Life Holding Company AEL has an Earnings ESP of +0.77% and is a Zacks #2 Ranked player. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for American Equity Investment’s bottom line for the to-be-reported quarter is pegged at $1.65 per share, which indicates a 68.4% increase from the year-ago period. The consensus estimate for AEL’s revenues is pegged at $555 million.
Postal Realty Trust, Inc. PSTL has an Earnings ESP of +3.09% and is a Zacks #3 Ranked player.
The Zacks Consensus Estimate for Postal Realty’s bottom line for the to-be-reported quarter is pegged at 24 cents per share, which remained stable over the past week. The consensus mark for PSTL’s revenues is pegged at $15.3 million, signaling 20.4% year-over-year growth.
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ProAssurance Corporation (PRA) : Free Stock Analysis Report
American Equity Investment Life Holding Company (AEL) : Free Stock Analysis Report
Postal Realty Trust, Inc. (PSTL) : Free Stock Analysis Report
Forge Global Holdings, Inc. (FRGE) : Free Stock Analysis Report
