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What's in Store for Hartford Financial (HIG) Q3 Results?

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Zacks Equity Research
·5 min read
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The Hartford Financial Services Group, Inc. HIG will release third-quarter 2020 financial results on Oct 29, after the closing bell.

For the to-be-reported quarter, we expect results to reflect a decline in revenues.

Now let’s see how the company is placed before its upcoming earnings announcement.

Q3 Earnings & Revenue Expectations

The Zacks Consensus Estimate for Hartford Financial’s third-quarter earnings of 88 cents per share implies a 41.3% decrease from the prior-year quarter’s reported number. Likewise, the consensus estimate for sales of $3.4 billion suggests a 35.1% plunge from the year-ago reported figure.

Factors at Play for Q3 Results

Hartford Financial’s Personal Lines segment is likely to have performed disappointingly in the third quarter due to lower earned premiums, which in turn, might have affected its revenue base. The consensus mark for the same hints at a fall of 4.7% from the year-earlier reported figure.

The company is expected to have witnessed a significant decline in new business in the middle and large commercial market.

The company’s top line might have been adversely impacted by decreased audit premiums and negative exposure endorsements.

On its last earnings call, management had expected better LP results in the third quarter owing to improved equity markets but still at a loss. The loss estimate is due to the currently unpredictable economic environment along with low public equity exposure and underlying funds.

The commercial lines business is likely to have persistently suffered lower underwriting gains. The consensus mark for core earnings from the business indicates a decline of 18.8%. The Zacks Consensus Estimate for earned premiums from this business line of $2.2 billion also suggests a fall of 2.1% from the year-ago reported figure.

Per the last earnings call, management had expected its operating cash flows to decrease 5.5% in the third quarter.

The Zacks Consensus Estimate for core earnings from Group Benefit implies a downside of 17.7% from the year-earlier reported number.
In the to-be-reported quarter, the company is likely to have witnessed pressure on net investment income. The consensus mark for net investment income from Property and Casualty indicates a downfall of 6.7% from the prior-year period’s reported figure. The consensus estimate for net investment income from Group Benefit implies a deterioration of 12.4% from the year-earlier reported number.

Despite initiatives taken by the company, we expect it to have incurred high expenses due to investments. Elevated expenses might have weighed on its margins.

The company also paused its capital deployment, which in turn,
couldn’t provide a cushion to its performance.

What the Quantitative Model States

Our proven model does not conclusively predict an earnings beat for Hartford Financial this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of a positive surprise. But that’s not the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Earnings ESP: Hartford Financial has an Earnings ESP of -4.97%. This is because the Most Accurate Estimate is pegged at 83 cents, lower than the Zacks Consensus Estimate of 88 cents.  You can see the complete list of today’s Zacks #1 Rank stocks here.

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 and EPS Surprise

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

Zacks Rank: Hartford Financial currently carries a Zacks Rank #4 (Sell), which decreases the predictive power of ESP.

Highlights of Q2 Earnings and Surprise History

Hartford Financial reported second-quarter 2020 adjusted operating earnings of $1.22 per share, which matched the Zacks Consensus Estimate. However, the bottom line fell 8% year over year, primarily due to reduced investment income, incurred benefits and losses pertaining to COVID-19, and higher current accident year catastrophesdue to civil unrest. Nevertheless, the results were partially offset by the effect of lower claim incidence and a net favorable P&C PYD.

The company flaunts an impressive earnings history, having delivered a positive surprise in all the trailing four quarters, the average being 6.6%.

Stocks to Consider

Here are a few stocks worth considering from the same space with the perfect mix of elements to beat on earnings in the respective upcoming releases:

CNO Financial Group, Inc. CNO has an Earnings ESP of +2.52% and a Zacks Rank #2, currently. The company is scheduled to release third-quarter earnings on Nov 2.

MGIC Investment Corporation MTG is slated to announce third-quarter earnings on Nov 4. The stock has an Earnings ESP of +14.89% and a Zacks Rank #3 at present.

Radian Group Inc. RDN is set to report third-quarter earnings on Nov 4. The stock is currently a #3 Ranked player and has an Earnings ESP of +5.43%.

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The Hartford Financial Services Group, Inc. (HIG) : Free Stock Analysis Report
 
MGIC Investment Corporation (MTG) : Free Stock Analysis Report
 
CNO Financial Group, Inc. (CNO) : Free Stock Analysis Report
 
Radian Group Inc. (RDN) : Free Stock Analysis Report
 
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