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Why Is CNO (CNO) Up 3.4% Since Last Earnings Report?

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A month has gone by since the last earnings report for CNO Financial (CNO). Shares have added about 3.4% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is CNO due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.

CNO Financial’s Q3 Earnings Lag Estimates, Fall Y/Y

CNO Financial Group’s third-quarter 2019 adjusted earnings per share of 45 cents, missing the Zacks Consensus Estimate of 47 cents by 4.3%. The bottom line also declined 15.1% year over year, mainly due to lower revenues.

In the quarter under review, CNO Financial’s total revenues plunged 36.3% year over year to $944 million, mainly due to lower net investment income and no realized investment gains. However, the same beat the Zacks Consensus Estimate by 6.9%.

Quarterly Operational Update

Total collected premiums of $949.3 million were up 2.9% from the prior-year quarter’s level, mainly driven by Bankers Life segment.

New annualized premiums for life and health products amounted to $84 million, up 2.8% from the year-ago period.

First-year collected premiums of $405.3 million rose 16% from the year-earlier quarter, primarily banking on the contribution from Bankers Life segment.

Quarterly Segment Update

Bankers Life


Total collected premiums of $692.8 million were up 9% year over year, aided by annuity.

New annualized premiums for life and health products were unchanged at $37.3 million.

Washington National

Total collected premiums of $176.1 million were up 5.1% year over year.

New Annualized premiums from life and health products were $27.5 million, up 8.7% from the year-ago quarter’s figure.

Colonial Penn

Total collected premiums were $77.1 million, up 4.2% year over year.

New annualized premiums from life and health products were $19.2 million, up 0.5% from the amount recorded in the comparable quarter last year.

Long-Term Care in Run-Off

Total collected premiums were $3.3 million, down 92.7% year over year.

The long-term care business was ceded under a 100% indemnity coinsurance agreement in the third quarter of 2018.

Financial Update

Unrestricted cash and investments held by CNO Financial’s holding company were $260 million as of Sep 30, 2019, up 18.2% from 2018 end.

Debt-to-capital ratio was 17.8% as of Sep 30, 2019 compared with 21.4% at the end of 2018.

Securities Repurchase and Divided Update

In the third quarter of 2019, the company returned shares worth $75.3 million and dividend payout of $16.8 million.
 

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in estimates revision.

VGM Scores

At this time, CNO has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with a D. However, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of this revision indicates a downward shift. It's no surprise CNO has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.


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