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Why Should You Retain CNO Financial (CNO) in Your Portfolio?

Zacks Equity Research

CNO Financial Group CNO remains well-poised for growth, given its strong revenue momentum and an attractive capital position.

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

Now let’s see what makes the company an investor favorite.

CNO Financial has been witnessing a solid revenue upsurge over the past few years. This upside is backed by the company’s increasing premiums, net investment income and a strong balance sheet.

Its Washington National business has been contributing well since 2011. In 2018, total premiums from this segment grew 4.6% year over year. This was mainly on the back of several growth initiatives introduced in the past couple of years, such as portfolio diversification and a geographic expansion program. We expect the same to continue on the back of its growth initiatives.

CNO Financial has also invested in technology to boost its agent productivity plus sales and advertising. This, in turn, is expected to improve online customer experience and enhance productivity. With added technology, CNO Financial can now easily access employer partners, which was earlier not possible due to dearth of a sophisticated benefits platform.

The company is firmly focused on improving its capital and debt position. It has also been hiking its quarterly dividend since 2013, which should instill investor’s confidence in the stock. Further, frequently taken up share repurchase programs have been a major capital deployment strategy for the company. It has witnessed a steady cash flow for the past several years as well. Moreover, its balance sheet strength, which assists in efficient capital management, should attract investors’ attention.

The Zacks Consensus Estimate for current-year earnings per share is pegged at $1.90, suggesting a rise of 3.8% on revenues of $3.74 billion from the year-ago reported figures.

For 2020, the Zacks Consensus Estimate for earnings per share stands at $2.23 on $3.8 billion revenues, implying a respective 17.1% and 1.9% increase from the prior-year reported numbers.

Shares of this Zacks Rank #3 (Hold) company have lost nearly 26.5% in a year's time, wider than its industry's decline of 3.9%.



Stocks to Consider

Investors interested in the insurance industry might look into some better-ranked stocks like MetLife, Inc. MET, Radian Group Inc. RDN and The Allstate Corporation ALL, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

MetLife offers insurance, annuities, employee benefits and asset management businesses. It came up with average positive surprise of 8.4% over the last four quarters.

Radian Group engages in the mortgage and real estate services business in the United States. The company pulled off a positive surprise of 10.1% in the last reported quarter.

Allstate offers property and casualty, and other insurance products in the United States and Canada. The company came up with average four-quarter positive surprise of 14.9%.

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