We expect property and casualty insurer CNA Financial Corporation (CNA Quick QuoteCNA - Free Report) to beat expectations when it reports first-quarter 2017 results on May 1, before the market opens.

Why a Likely Positive Surprise?

Our proven model shows that CNA Financial has the right combination of two key ingredients to beat estimates this quarter.

Zacks ESP: Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is +10.13%. This is because the Most Accurate estimate of 87 cents is higher than the Zacks Consensus Estimate of 79 cents. The positive ESP is a meaningful and leading indicator of a likely earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: CNA Financial carries a Zacks Rank #3 (Hold). Please note that stocks with a Zacks Rank of #1 (Strong Buy), 2 (Buy) or 3 have a significantly higher chance of beating on earnings. The combination of CNA Financial’s favorable Zacks Rank and positive Earnings ESP makes us reasonably confident of an earnings beat.

Conversely, the Sell-rated stocks (Zacks Rank #4 or 5) should never be considered going into an earnings announcement, especially when the company is seeing negative estimate revisions.

What is Driving the Better-Than-Expected Earnings?

CNA Financial is likely to report bottom-line growth in the first quarter on the back of improved results at its Specialty and International segments.

Moreover, the property and casualty (P&C) insurer is expected to record improvement in combined ratio in spite of a tough operating environment. CNA Financial’s superior underwriting discipline should prove to be beneficial in this regard.

Further, the company is likely to display profitability at its Life & Group business in the to-be-reported quarter.

Also, the P&C insurer’s disciplined approach toward the market is expected to have resulted in an improvement in new business.  

However, CNA Financial is likely to report higher expenses in the first quarter, mainly due to increasing net incurred claims and benefits and amortization of deferred acquisition costs. This increase in expenses is likely to restrict operating margin expansion, which in turn, may hurt the company’s overall profitability.

With respect to earnings trend, the company delivered positive surprises in three of the last four quarters with an average beat of 11.59%.

Other Stocks to Consider

Here are some companies from the finance sector that you may want to consider as these have the right combination of elements to post an earnings beat this quarter:

American Financial Group, Inc. (AFG Quick QuoteAFG - Free Report) , which is set to report first-quarter earnings on May 3, has an Earnings ESP of +2.19% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Prudential Financial, Inc. (PRU Quick QuotePRU - Free Report) has an Earnings ESP of +0.38% and a Zacks Rank #2. The company is set to report first-quarter earnings on May 3.

AerCap Holdings N.V. (AER Quick QuoteAER - Free Report) has an Earnings ESP of +2.13% and a Zacks Rank #3. The company is slated to report first-quarter earnings on May 9.

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