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Will Cat Losses and Expenses Mar Allstate (ALL) Q3 Earnings?
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The Allstate Corp. (ALL - Free Report) is scheduled to report third-quarter earnings on Nov 4, after market close. The company’s earnings as well as revenues are expected to have declined year over year.
In the last reported quarter, Allstate’s earnings surpassed the Zacks Consensus Estimate by 13.46%, led by increased premiums and policies in force.
Q3 Earnings & Revenue Expectations
The Zacks Consensus Estimate for Allstate’s third-quarter earnings of $1.77 per share implies a 37.7% decrease from the prior-year quarter’s reported number. Likewise, the consensus estimate for sales of $10.8 billion suggests a 0.8% dip from the year-ago quarter’s reported figure.
Factors Likely to Impact Q3 Results
The company is likely to have borne pre-tax catastrophe losses of $990 million in the third quarter. These losses will cover weather-related events in July (Hurricane Hanna and two severe wind and hail events), August (Hurricane Laura and Hurricane Isaias) and September (11wildfire events across California, Oregon and Washington plus nine other occurrences).
This catastrophe loss combined with expenses incurred for the company’s multi-year Transformative Growth Plan and low interest rates are likely to hurt the company's third-quarter earnings results.. Allstate is also expected to have recognized a premium deficiency reserve for immediate annuities with life contingencies. This might have diminished its net income but not the adjusted figure.
Though the transformative growth initiative will bear fruits after some time, financial results for the September quarter will see an increase in expenses on account of the same. These charges are expected to have reduced both net and adjusted net incomes. Severance and employee benefits are the primary costs comprising nearly $210 million pretax. Additionally, Allstate is expected to have incurred real estate exit costs of roughly $80 million pretax, resulting from office closures.
The company’s third-quarter results will likely be affected by low interest rates. The expectation that interest rates will remain low will also impact the impending results. A premium deficiency reserve for immediate annuities with life contingencies is expected to have recognized, given the updated investment and actuarial assumptions, which might have reduced net income but not the adjusted number. The annual review of assumptions for life insurance, other annuities and Discontinued Lines and Coverages is likely to have reduced both net and adjusted incomes. In total, these items might have lowered net income by approximately $450-$550 million pretax and adjusted net income by nearly $240-$280 million pretax.
Allstate Benefits premiums are likely to have declined due to lower sales from stiff competition and the coronavirus adversity on economy including higher employee turnover, business closures and furloughs.
The company’s Service Businesses revenues are likely to have risen on higher policies in force, largely owing to expansion in Allstate Protection Plans.
Earnings Surprise History
Over the last four quarters, the company’s earnings beat the consensus estimate on all occasions, the average being 25.24%.
Our proven model does not predict an earnings beat for Allstate this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of beating estimates. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Earnings ESP: Allstate has an Earnings ESP of 0.00%.
Zacks Rank: Allstate currently has a Zacks Rank #3.
Stocks to Consider
Some stocks worth considering with the perfect combination of elements to surpass estimates this reporting cycle are as follows:
Sun Life Financial Inc. (SLF - Free Report) has an Earnings ESP of +4.65% and a Zacks Rank of 3 at present.
Manulife Financial Corp. (MFC - Free Report) has an Earnings ESP of +3.85% and is currently Zacks #3 Ranked.
Green Dot Corporation (GDOT - Free Report) has an Earnings ESP of +5.88% and is a #3 Ranked player, currently.
The Hottest Tech Mega-Trend of All
Last year, it generated $24 billion in global revenues. By 2020, it's predicted to blast through the roof to $77.6 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
Image: Bigstock
Will Cat Losses and Expenses Mar Allstate (ALL) Q3 Earnings?
The Allstate Corp. (ALL - Free Report) is scheduled to report third-quarter earnings on Nov 4, after market close. The company’s earnings as well as revenues are expected to have declined year over year.
In the last reported quarter, Allstate’s earnings surpassed the Zacks Consensus Estimate by 13.46%, led by increased premiums and policies in force.
Q3 Earnings & Revenue Expectations
The Zacks Consensus Estimate for Allstate’s third-quarter earnings of $1.77 per share implies a 37.7% decrease from the prior-year quarter’s reported number. Likewise, the consensus estimate for sales of $10.8 billion suggests a 0.8% dip from the year-ago quarter’s reported figure.
Factors Likely to Impact Q3 Results
The company is likely to have borne pre-tax catastrophe losses of $990 million in the third quarter. These losses will cover weather-related events in July (Hurricane Hanna and two severe wind and hail events), August (Hurricane Laura and Hurricane Isaias) and September (11wildfire events across California, Oregon and Washington plus nine other occurrences).
This catastrophe loss combined with expenses incurred for the company’s multi-year Transformative Growth Plan and low interest rates are likely to hurt the company's third-quarter earnings results.. Allstate is also expected to have recognized a premium deficiency reserve for immediate annuities with life contingencies. This might have diminished its net income but not the adjusted figure.
Though the transformative growth initiative will bear fruits after some time, financial results for the September quarter will see an increase in expenses on account of the same. These charges are expected to have reduced both net and adjusted net incomes. Severance and employee benefits are the primary costs comprising nearly $210 million pretax. Additionally, Allstate is expected to have incurred real estate exit costs of roughly $80 million pretax, resulting from office closures.
The company’s third-quarter results will likely be affected by low interest rates. The expectation that interest rates will remain low will also impact the impending results. A premium deficiency reserve for immediate annuities with life contingencies is expected to have recognized, given the updated investment and actuarial assumptions, which might have reduced net income but not the adjusted number. The annual review of assumptions for life insurance, other annuities and Discontinued Lines and Coverages is likely to have reduced both net and adjusted incomes. In total, these items might have lowered net income by approximately $450-$550 million pretax and adjusted net income by nearly $240-$280 million pretax.
Allstate Benefits premiums are likely to have declined due to lower sales from stiff competition and the coronavirus adversity on economy including higher employee turnover, business closures and furloughs.
The company’s Service Businesses revenues are likely to have risen on higher policies in force, largely owing to expansion in Allstate Protection Plans.
Earnings Surprise History
Over the last four quarters, the company’s earnings beat the consensus estimate on all occasions, the average being 25.24%.
The Allstate Corporation Price and EPS Surprise
The Allstate Corporation price-eps-surprise | The Allstate Corporation Quote
Here is what our quantitative model predicts:
Our proven model does not predict an earnings beat for Allstate this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of beating estimates. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Earnings ESP: Allstate has an Earnings ESP of 0.00%.
Zacks Rank: Allstate currently has a Zacks Rank #3.
Stocks to Consider
Some stocks worth considering with the perfect combination of elements to surpass estimates this reporting cycle are as follows:
You can see the complete list of today’s Zacks #1 Rank stocks here.
Sun Life Financial Inc. (SLF - Free Report) has an Earnings ESP of +4.65% and a Zacks Rank of 3 at present.
Manulife Financial Corp. (MFC - Free Report) has an Earnings ESP of +3.85% and is currently Zacks #3 Ranked.
Green Dot Corporation (GDOT - Free Report) has an Earnings ESP of +5.88% and is a #3 Ranked player, currently.
The Hottest Tech Mega-Trend of All
Last year, it generated $24 billion in global revenues. By 2020, it's predicted to blast through the roof to $77.6 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
See Zacks' 3 Best Stocks to Play This Trend >>