CNA Financial Corporation (NYSE:CNA) last week reported its latest quarterly results, which makes it a good time for investors to dive in and see if the business is performing in line with expectations. It looks like the results were a bit of a negative overall. While revenues of US$3.2b were in line with analyst predictions, statutory earnings were less than expected, missing estimates by 9.2% to hit US$1.09 per share. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on CNA Financial after the latest results.
Following the latest results, CNA Financial's three analysts are now forecasting revenues of US$13.0b in 2023. This would be a satisfactory 7.3% improvement in sales compared to the last 12 months. Statutory earnings per share are predicted to jump 27% to US$4.20. Before this earnings report, the analysts had been forecasting revenues of US$12.9b and earnings per share (EPS) of US$4.38 in 2023. The analysts seem to have become a little more negative on the business after the latest results, given the small dip in their earnings per share numbers for next year.
It might be a surprise to learn that the consensus price target was broadly unchanged at US$46.00, with the analysts clearly implying that the forecast decline in earnings is not expected to have much of an impact on valuation. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. There are some variant perceptions on CNA Financial, with the most bullish analyst valuing it at US$52.00 and the most bearish at US$40.00 per share. With such a narrow range of valuations, the analysts apparently share similar views on what they think the business is worth.
Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. The analysts are definitely expecting CNA Financial's growth to accelerate, with the forecast 9.9% annualised growth to the end of 2023 ranking favourably alongside historical growth of 4.5% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 5.6% annually. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect CNA Financial to grow faster than the wider industry.
The Bottom Line
The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for CNA Financial. Happily, there were no major changes to revenue forecasts, with the business still expected to grow faster than the wider industry. The consensus price target held steady at US$46.00, with the latest estimates not enough to have an impact on their price targets.
Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have forecasts for CNA Financial going out to 2024, and you can see them free on our platform here.
You still need to take note of risks, for example - CNA Financial has 1 warning sign we think you should be aware of.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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