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What's in the Cards for The Hartford (HIG) Earnings in Q2?

Zacks Equity Research

The Hartford Financial Services Group, Inc. HIG will release second-quarter 2019 earnings results on Aug 1, after the closing bell.

In the last reported quarter, the company came up with adjusted operating earnings of $1.39 per share, beating the Zacks Consensus Estimate by 12%. Moreover, the bottom line improved 9.4% year over year. This upside was primarily backed by stronger core earnings in Group Benefits and lower Corporate core losses.

The company also flaunts an impressive surprise history, the average four-quarter beat being 13.4%.

Let’s see, how things are shaping up for this announcement.

Q2 Expectations

The company completed the  buyout of The Navigators Group, Inc. on May 23, 2019 for a total cash value of $2.2 billion, which is likely to have weighed down its margins because of acquisition related expenses.

The Zacks Consensus Estimate for second-quarter earnings is pegged at $1.11, indicating nearly 1.8% dip from the year-ago reported figure. This downside could have been due to deterioration in Worker’s Compensation and higher expenses on account of investments in operations and technology. The Personal Lines segment is also expected to have suffered in the to-be-reported quarter due to higher auto liability loss costs.

Lower share count owing to continued buybacks should provide an additional boost to the bottom line.

Hartford Financial is likely to have gained from its strategic acquisitions and alliances in the to-be-reported quarter. Its net investment income, which has been increasing over the past few years, might have witnessed an uptick in the second quarter as well. Moreover, rising investment income should contribute to revenue growth.

Additionally, the company is expected to have been successful in reducing its debt level in the second quarter of 2019.

What the Quantitative Model States

Our proven model conclusively shows that Hartford Financial is likely to beat on earnings this quarter to be reported. This is because the stock hasthe right combination of a positive Earnings ESP and a favorable Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen.

Earnings ESP: Hartford Financial has an Earnings ESP of +0.54% as the Most Accurate Estimate of $1.12 is pegged higher than the Zacks Consensus Estimate of $1.11. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.

The Hartford Financial Services Group, Inc. Price and EPS Surprise

The Hartford Financial Services Group, Inc. Price and EPS Surprise

The Hartford Financial Services Group, Inc. price-eps-surprise | The Hartford Financial Services Group, Inc. Quote

Zacks Rank: Hartford Financial carries a Zacks Rank #3, which increases the predictive power of ESP. Further, a positive ESP in the combination makes chances of an earnings beat significantly higher for the stock this time around.

Conversely, the Sell-rated stocks (#4 or 5) should never be considered going into an earnings announcement, especially when the company is seeing negative estimate revisions.

Other Stocks to Consider

Some other stocks worth considering from the finance sector with the perfect mix of elements to also surpass estimates this reporting cycle are as follows:

Voya Financial, Inc. VOYA has an Earnings ESP of +0.86% and a Zacks Rank of 3. The company is set to announce second-quarter earnings on Aug 6.  You can see the complete list of today’s Zacks #1 Rank stocks here.

American Financial Group, Inc. AFG has an Earnings ESP of +0.66% and is a Zacks #3 Ranked player. The company is set to announce second-quarter earnings on Aug 6.  

Alleghany Corporation Y has an Earnings ESP of +1.74% and a Zacks Rank of 3. The company is set to release second-quarter earnings on Aug 6.

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