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The Zacks Analyst Blog Highlights: Prudential Financial, Lincoln National, American Equity Investment Life Holding and Voya Financial

Zacks Equity Research
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For Immediate Release

Chicago, IL – October 27, 2017 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include Prudential Financial, Inc. PRU, Lincoln National Corporation LNC, American Equity Investment Life Holding Company AEL and Voya Financial, Inc. VOYA.

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Here are highlights from Thursday’s Analyst Blog:

Insure Your Portfolio with 4 Stocks Set to Beat Q3 Earnings

Third-quarter earnings season has seen 164 members of the elite S&P 500 index having reported quarterly results so far. Let’s see how the quarter is turning up for the life and non-life or property and casualty (P&C) insurance space.

No doubt, the third quarter is characterized by a barrage of catastrophe events that wreaked havoc. While Harvey rocked Houston and Texas Gulf Coast, Irma ran amok in the regions across the Caribbean to Florida. Both storms are considered costliest in a decade. Incidentally, Maria hit Puerto Rico and Virginia Island with two Mexican tremors further adding to the woes.

Per the catastrophe modeler AIR Worldwide, the insured loss estimates from Irma could range between $25 billion and $35 billion and between $40 billion and $85 billion from Maria. Moody’s Analytics earlier estimated economic losses from Irma to come in the $58-$83 billion band while that from Harvey could be as high as $108 billion.

Underwriting profitability, a measure of P&C insurers’ performance, has been severely hampered in the third quarter. While most P&C insurers’ profits declined compared with the year-ago results, some have incurred losses in the quarter. Combined ratios have deteriorated badly and pricing remained soft.

However, capital accumulation from a not-so-active catastrophe environment in the previous quarters, prudent underwriting standards as well as cost control measures will cushion insurers.

Amid bad news, a silver lining in the cloud is the gradual improvement in the interest rate environment. The Federal Reserve has made three hikes since December 2016. The third quarter continues to enjoy the positive impact of a favorable rate environment, driving the insurer’s investment results and performance of life insurers.

Improving interest rates came in as a sign of relief for the life insurers that suffered a spread compression on products like fixed annuities and universal life due to persistently low rates. Investment yield is also likely to have improved. Annuity sales too should have benefited from higher rates. Life insurers have considerably lowered their exposure to interest-sensitive product lines.

Also, a progressing economy means more disposable income and a better-consumer sentiment. This, in turn, is likely to have supported more policy writings, thus driving premiums higher. Premiums contribute a lion’s share to an insurer’s top line.

With strong positives guarding the results, investors can bet on the stocks, poised to deliver positive earnings surprises in their upcoming reports.  

Ways to Pick the Right Insurance Stocks

Choosing the right stock for one’s portfolio from too many participants is a daunting task for investors. But an easy way to trim the list is by looking at the stocks with a positive Earnings ESP and a solid Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) that are likely to surpass estimates.

Earnings ESP is our proprietary methodology for determining stocks with the best chances of delivering an earnings surprise in their next announcement. It shows the percentage difference between the Most Accurate estimate and the Zacks Consensus Estimate. Please check our Earnings ESP Filter that enables you to find stocks with the potential to come up with an earnings beat.

Our research shows that for the stocks with an ideal combination of two key ingredients, chances of a positive earnings surprise are as high as 70%.

For investors seeking to apply this strategy to their portfolios, we have highlighted four insurance stocks that might stand out with earnings beats in their upcoming releases.  

Prudential Financial, Inc.

Newark, NJ-based Prudential offers an array of financial products and services including life insurance, annuities, retirement-related services, mutual funds, investment management and real estate services.

With a Zacks Rank #2 and an Earnings ESP of +0.07%, Prudential looks well-poised for a positive surprise. The Zacks Consensus Estimate for the third quarter is pegged at $2.71 per share, up 1.9% year over year. With respect to the surprise trend, the company surpassed expectations in three of the last four quarters. You can see the complete list of today’s Zacks #1 Rank stocks here.

Prudential will announce third-quarter results after the closing bell on Nov 2.

Lincoln National Corporation

Philadelphia, PA-based Lincoln National is a diversified life insurance and investment management company.

Also carrying a Zacks Rank of 2, the company has an Earnings ESP of +0.05%. It is therefore likely to deliver another quarter of a positive earnings surprise. The Zacks Consensus Estimate for the third quarter is pegged at $1.84 per share, up 0.3% year over year. The company outperformed expectations in the last four quarters with an average beat of 10.48%.

Lincoln National is scheduled to announce third -quarter results after the closing bell on Nov 1.

American Equity Investment Life Holding Company

West Des Moines, IA-based American Equity Investment develops and sells fixed index and fixed rate annuity products in the United States.

American Equity Investment sports a Zacks Rank of 1 and an Earnings ESP of +0.40%. The Zacks Consensus Estimate for the third quarter is pegged at 63 cents per share. The company outpaced expectations in three of the last four quarters.

American Equity Investment will announce third-quarter results after the closing bell on Nov 6.

Voya Financial, Inc.

Headquartered in New York, NY, Voya Financial operates as a retirement, investment and an insurance company in the United States.

With a Zacks Rank #3 and an Earnings ESP of +1.21%, Voya Financial looks well set for a likely positive surprise. The Zacks Consensus Estimate for the third quarter stands at 89 cents per share, up 142% year over year. The company exceeded expectations in two of the last four quarters.

Voya Financial is scheduled to announce third-quarter results after the closing bell on Oct 31.

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Zacks Equity Research provides the best of quantitative and qualitative analysis to help investors know what stocks to buy and which to sell for the long-term.

Continuous coverage is provided for a universe of 1,150 publicly traded stocks. Our analysts are organized by industry which gives them keen insights to developments that affect company profits and stock performance. Recommendations and target prices are six-month time horizons.

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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.


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Lincoln National Corporation (LNC) : Free Stock Analysis Report
 
American Equity Investment Life Holding Company (AEL) : Free Stock Analysis Report
 
Voya Financial, Inc. (VOYA) : Free Stock Analysis Report
 
Prudential Financial, Inc. (PRU) : Free Stock Analysis Report
 
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