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CNO (CNO) Up 6.6% Since Last Earnings Report: Can It Continue?
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It has been about a month since the last earnings report for CNO Financial (CNO - Free Report) . Shares have added about 6.6% 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 drivers.
CNO Financial Q1 Earnings Miss Estimates, Revenues Up Y/Y
CNO Financial reported first-quarter 2024 adjusted earnings per share (EPS) of 52 cents, which missed the Zacks Consensus Estimate by 18.8%. However, the bottom line rose 2% year over year.
Total revenues increased 14.9% year over year to $1.2 billion in the first quarter. The top line beat the consensus mark by 23.6%.
The first-quarter earnings were affected by unfavorable mark to market impacts on its real-estate alliances, which had a negative effect in its alternative investment portfolio. However, the negatives were partially offset by increased premiums.
First-Quarter Performance
Total insurance policy income of $628.4 million improved 0.5% year over year but missed the Zacks Consensus Estimate by 1.1% due to a decline in health insurance policy income.
CNO’s net investment income increased 36.8% year over year to $469.2 million in the first quarter. General account assets grew 3.3% year over year to $301.9 million but missed the consensus mark by 1.2%. Also, the policyholder and other special-purpose portfolios jumped more than two times to $167.3 million. However total investment income not allocated to product lines declined year over year due to widening loss in total variable components. Excess alternative investment loss reached $31.4 million in the first quarter, widening from $17.2 million in the year ago period.
Annuity collected premiums of $393.3 million increased 6% year over year. New annualized premiums for health and life products advanced 8.2% year over year to $104.5 million. Annuity, Health and Life products accounted for 22.6%, 53.6% and 23.8%, respectively, of CNO’s insurance margin.
Total benefits and expenses were $1 billion, which inched up 0.3% year over year. The increase in the metric was attributable to higher insurance policy benefits, interest expenses and other operating costs.
Financial Update (as of Mar 31, 2024)
CNO Financial exited the first quarter with unrestricted cash and cash equivalents of $566.3 million, which decreased from the 2023-end level of $774.5 million. Total assets of $34.9 billion declined from $35.1 billion at 2023-end.
The debt-to-capital ratio was 32.5% at the first-quarter end. It has no outstanding debt maturities till 2025.
Total shareholders’ equity jumped to $2.4 billion from $2.2 billion as of Dec 31, 2023.
Book value per diluted share increased to $21.81 in the first quarter from $20.26 at 2023-end. Adjusted operating return on equity came in at 9.7%, which deteriorated from 10.3% a year ago.
2024 Guidance Reaffirmed
CNO Financial now expects 2024 EPS in the range of $3.10-$3.30, indicating an increase from the 2023 figure of $3.09. The company expects the expense ratio in the range of 18.8%-19.2% for 2024, improving from the 2023 level of 19.4%. It anticipates the effective tax rate for 2024 to be around 23%. It is also aiming at a leverage of 25 for this year.
Share Repurchase and Dividend Update
CNO Financial rewarded its shareholders with $57.3 million in the form of share buybacks and dividends of $17.3 million.
As of Mar 31, 2024, the company had remaining repurchase funds of $481.8 million.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in fresh estimates.
VGM Scores
At this time, CNO has a subpar Growth Score of D, a grade with the same score on the momentum front. However, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, CNO has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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CNO (CNO) Up 6.6% Since Last Earnings Report: Can It Continue?
It has been about a month since the last earnings report for CNO Financial (CNO - Free Report) . Shares have added about 6.6% 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 drivers.
CNO Financial Q1 Earnings Miss Estimates, Revenues Up Y/Y
CNO Financial reported first-quarter 2024 adjusted earnings per share (EPS) of 52 cents, which missed the Zacks Consensus Estimate by 18.8%. However, the bottom line rose 2% year over year.
Total revenues increased 14.9% year over year to $1.2 billion in the first quarter. The top line beat the consensus mark by 23.6%.
The first-quarter earnings were affected by unfavorable mark to market impacts on its real-estate alliances, which had a negative effect in its alternative investment portfolio. However, the negatives were partially offset by increased premiums.
First-Quarter Performance
Total insurance policy income of $628.4 million improved 0.5% year over year but missed the Zacks Consensus Estimate by 1.1% due to a decline in health insurance policy income.
CNO’s net investment income increased 36.8% year over year to $469.2 million in the first quarter. General account assets grew 3.3% year over year to $301.9 million but missed the consensus mark by 1.2%. Also, the policyholder and other special-purpose portfolios jumped more than two times to $167.3 million. However total investment income not allocated to product lines declined year over year due to widening loss in total variable components. Excess alternative investment loss reached $31.4 million in the first quarter, widening from $17.2 million in the year ago period.
Annuity collected premiums of $393.3 million increased 6% year over year. New annualized premiums for health and life products advanced 8.2% year over year to $104.5 million. Annuity, Health and Life products accounted for 22.6%, 53.6% and 23.8%, respectively, of CNO’s insurance margin.
Total benefits and expenses were $1 billion, which inched up 0.3% year over year. The increase in the metric was attributable to higher insurance policy benefits, interest expenses and other operating costs.
Financial Update (as of Mar 31, 2024)
CNO Financial exited the first quarter with unrestricted cash and cash equivalents of $566.3 million, which decreased from the 2023-end level of $774.5 million. Total assets of $34.9 billion declined from $35.1 billion at 2023-end.
The debt-to-capital ratio was 32.5% at the first-quarter end. It has no outstanding debt maturities till 2025.
Total shareholders’ equity jumped to $2.4 billion from $2.2 billion as of Dec 31, 2023.
Book value per diluted share increased to $21.81 in the first quarter from $20.26 at 2023-end. Adjusted operating return on equity came in at 9.7%, which deteriorated from 10.3% a year ago.
2024 Guidance Reaffirmed
CNO Financial now expects 2024 EPS in the range of $3.10-$3.30, indicating an increase from the 2023 figure of $3.09. The company expects the expense ratio in the range of 18.8%-19.2% for 2024, improving from the 2023 level of 19.4%. It anticipates the effective tax rate for 2024 to be around 23%. It is also aiming at a leverage of 25 for this year.
Share Repurchase and Dividend Update
CNO Financial rewarded its shareholders with $57.3 million in the form of share buybacks and dividends of $17.3 million.
As of Mar 31, 2024, the company had remaining repurchase funds of $481.8 million.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in fresh estimates.
VGM Scores
At this time, CNO has a subpar Growth Score of D, a grade with the same score on the momentum front. However, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, CNO has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.