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Will StanCorp (SFG) Beat Earnings Estimates?

Zacks Equity Research

StanCorp Financial Group Inc. (SFG) is set to report second quarter 2013 results on Jul 23. Last quarter it posted a 33.7% surprise. Let’s see how things are shaping up for this announcement.

Growth Factors This Quarter

StanCorp Financial’s Asset Management segment continues to perform well. The trend is expected to continue in the future. Further, we expect the company to reap the benefits of lower operating expenses that helped it to outperform in the last reported quarter.
StanCorp Financial enjoys a strong capital position, which allows it to enhance shareholder value. StanCorp Financial expects to buy back shares worth $40 million to $80 million in 2013. This will boost the bottom line. In order to return more profit, the company raises its dividend on a regularly basis.

In addition, StanCorp Financial’s investment portfolio continues to perform well with no considerable exposure to high-risk asset classes.

However, lower Group insurance premiums due to a low single-digit price increase in the group insurance business and stiff competition weighed on new sales and renewals. The lack of employment and wage growth is also expected to weigh on the performance.

A low interest rate environment is also a concern.

Earnings Whispers?

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

Positive Zacks ESP:  That is because the Most Accurate Estimate stands at $1.00, while the Zacks Consensus Estimate is higher at $1.01. That comes to a difference of -0.99%.

Zacks Rank #1 (Strong Buy): StanCorp Financial’s Zacks Rank #1 (Strong Buy) increases the predictive power of ESP. However, the Zacks Rank #1 when combined with a negative ESP makes surprise prediction difficult.

Other Stocks to Consider

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

  • Genworth Financial Inc. (GNW), Earnings ESP of +11.11% and Zacks Rank #3 (Hold)
  • Primerica, Inc. (PRI), Earnings ESP of +1.39% and Zacks Rank #3 (Hold)
  • Universal American Corp. (UAM), Earnings ESP of +0.78% and Zacks Rank #3 (Hold)

Read the Full Research Report on SFG

Read the Full Research Report on GNW

Read the Full Research Report on UAM

Read the Full Research Report on PRI

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