Yahoo Finance CNO (CNO) Down 1.9% Since Last Earnings Report: Can It Rebound?
It has been about a month since the last earnings report for CNO Financial (CNO). Shares have lost about 1.9% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is CNO due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
CNO Financial’s Q1 Earnings Miss on Increased Expenses
CNO Financial Group reported first-quarter 2023 adjusted earnings per share (EPS) of 51 cents, which missed the Zacks Consensus Estimate of 65 cents and our estimate of 54 cents. Also, the bottom line dropped 6% year over year.
Total revenues jumped 19.3% year over year to $1,006 million in the quarter under review. The top line beat the consensus mark by 9.5% and our estimate of $911.8 million.
The weak quarterly earnings were caused by a massive increase in benefits and expenses, partially offset by improved annuity collected premiums, higher direct-to-consumer life sales and increased net investment income.
Quarterly Performance
Insurance policy income of $625.5 million rose 0.1% year over year but fell shy of our estimate of $638.2 million.
CNO’s net investment income increased 65% year over year to $343 million in the first quarter.
Annuity collected premiums of $370.9 million rose 1% year over year. New annualized premiums for health and life products advanced 7% year over year to $96.6 million.
Total benefits and expenses came in at $1,007 million, which jumped 67.1% year over year in the first quarter. The increase in the metric was attributable to higher insurance policy benefits, interest expenses and other operating costs.
Financial Update (as of Mar 31, 2023)
CNO Financial exited the first quarter with unrestricted cash and cash equivalents of $425 million, which tumbled from the 2022-end level of $575.7 million.
Total assets of $34,015 million rose from $33,133.1 million at 2022 end.
Total shareholders’ equity jumped to $2,031.8 million from $1,768.8 million as of Dec 31, 2022.
Book value per diluted share declined to $17.49 in the first quarter from $23.58 a year ago.
Adjusted operating return on equity came in at 10.3%, which deteriorated 190 basis points year over year.
The debt-to-capital ratio was 35.9% at the first-quarter end.
Share Repurchase and Dividend Update
CNO Financial rewarded its shareholders with $32.2 million in the form of share buybacks worth $15.1 million and dividends of $17.1 million.
As of Mar 31, 2023, the company had remaining repurchase funds of $171.8 million.
Forward View
CNO Financial continues to expect 2023 EPS within $2.80-$3, up from the year-ago level of $2.33.
It expects the expense ratio to be in the range of 19-19.4% for 2023, due to improvement in Life margin from the first-quarter level. It also expects expenses to decline in the coming quarters.
CNO anticipates the effective tax rate for the year to be within 23-24%.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended upward during the past month.
The consensus estimate has shifted 9.92% due to these changes.
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 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been 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.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
CNO Financial Group, Inc. (CNO) : Free Stock Analysis Report
