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Why Should You Add Hartford Financial to Your Portfolio?

Zacks Equity Research

The Hartford Financial Services Group, Inc. HIG is well-poised for growth on the back of solid strategies and impressive capital strength.

The stock has seen the Zacks Consensus Estimate for 2019 and 2020 earnings move 0.4% north, respectively, over the past 30 days.

The company flaunts an encouraging earnings surprise history, having outpaced the Zacks Consensus Estimate in all the trailing four quarters, the average being 13.4%. This trend of straight estimate beats mirrors the company’s operating efficiency.

The company is well-positioned for growth, evident from its favorable VGM Score of A. Here V stands for Value, G for Growth and M for Momentum with the score being a weighted combination of all three factors.  

Its return on equity — a profitability measure — is 12.5%, better than the industry average of 7.9%. Further, the metric reflects the company’s effectiveness in utilizing its shareholders’ money.

The company recently delivered first-quarter 2019 adjusted earnings of $1.39 per share, surpassing the Zacks Consensus Estimate by 12% and also rising 9.4% year over year. This upside was primarily backed by stronger core earnings in Group Benefits and lower Corporate core losses. Moreover, total operating revenues came in at $4.94 billion, up 4.6% year over year, supported by net realized capital gains. Further, the quarter witnessed a dip in total expenses, which is an upside.

The company has constantly put in efforts to improve its risk profile by a number of well-executed strategic dispositions of its legacy run-off businesses. It has been vending non-core businesses to concentrate on its U.S. operations and enhance its operating leverage. Apart from lowering expenses, boosting profitability and improving returns to shareholders, these divestitures are enriching financial flexibility by freeing up more capital.

Hartford Financial’s capital appreciations, repayment of government funds and robust measures to de-risk its balance sheet increased its financial strength. It also has an intelligent capital management strategy, featuring share buybacks and dividend hikes. Its balance sheet strength, which assists in efficient capital management, should attract investors’ attention.

The company has also been successful in reducing its debt burden over the past several years. In the last four years (2012-2016), the company’s long-term debt has decreased 33%.

The Zacks Consensus Estimate for current-year earnings is pegged at $5.12, indicating a rise of 18.3% from the prior-year reported number on revenues of $20.22 billion, up 6% from the year-ago reported figure.

For 2020, the Zacks Consensus Estimate for earnings stands at $5.46 on $21.49 billion revenues, suggesting a respective 6.7% and 6.3% increase from the year-earlier reported figures.

Shares of this Zacks Rank #2 (Buy) company have inched up 1.5% in a year’s time against its industry’s decline of 2.1%.


Other Stocks to Consider

Investors interested in the same space can look into some other top-ranked stocks like Goosehead Insurance Inc. GSHD, MGIC Investment Corporation MTG and Kemper Corporation KMPR. You can see the complete list of today’s Zacks #1 Rank stocks here.

Goosehead Insurance works as a holding company for Goosehead Financial, LLC, offering personal lines insurance agency services. It has a Zacks Rank of 2 and average four-quarter positive surprise of 5%.

MGIC Investment Corporation provides private mortgage insurance and ancillary services in the United States. The company pulled off encouraging average positive surprise of 23.4% over the preceding four quarters. It has a Zacks Rank #1 (Strong Buy).

Kemper is a diversified insurance holding company, providing property and casualty plus life and health insurance in the United States. This Zacks #2 Ranked player managed to deliver average trailing four-quarter beat of 14.13%.

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