Yahoo Finance Should You Retain CNA Financial (CNA) Stock in Your Portfolio?
CNA Financial Corporation CNA has been benefiting from improved current accident year underwriting results, new businesses, higher income from fixed-income securities, sufficient liquidity and effective capital deployment.
Optimistic Growth Projections
The consensus estimate for 2023 and 2024 earnings is pegged at $4.22 and $4.47, indicating 9.9% and 6% increase from the year-ago reported figure, driven by 6.6% and 2.7% higher revenues of $11.2 billion and $11.51 billion, respectively. The expected long-term earnings growth rate is pegged at 5%.
Earnings Surprise History
CNA Financial has a decent earnings surprise history. It beat estimates in two of the last four quarters and missed in the other two, the average being 9.91%.
Zacks Rank & Price Performance
CNA Financial currently carries a Zacks Rank #3 (Hold). In the past year, the stock has lost 11.4% against the industry’s increase of 4.8%.
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Return on Equity (ROE)
CNA Financial’s ROE for the trailing 12 months is 12%, expanding 250 basis points (bps) year over year. ROE reflects the insurer’s efficiency in using shareholders’ funds. Also, core ROE expanded 110 bps to 10.8%.
Style Score
CNA Financial has a favorable VGM Score of A. The VGM Score helps identify stocks with the most attractive value, the best growth and most promising momentum.
Business Tailwinds
CNA Financial remains well-poised to gain from a rise in new businesses, strong rate, lower net catastrophe losses, improved non-catastrophe current accident year underwriting results and higher net earned premium, which contribute to premium growth across its Specialty, Commercial and International segments.
Net investment income should gain from fixed-income securities and other investments as well as a rise in income from limited partnership and common stock investments. Fixed income continues to benefit from favorable reinvestment yields and strong operating cash flows. CNA Financial’s fixed-income investment strategy with highest allocations to diversified investment grade corporates as well as highly rated municipal securities should support investment results.
CNA Financial has been able to maintain underlying combined ratio below 95 for straight 13 quarters. Despite of elevated industry catastrophe losses in the first quarter of 2023, the all-in combined ratio remained strong at 93.9%, which reflects prudent management of catastrophe exposures. Through targeted portfolio management strategies, the company made significant progress in successfully repositioning the portfolio underwritten via Lloyd’s syndicate in its effort to improve the overall underwriting results of its international operation.
CNA Financial continues to maintain a conservative capital structure with a leverage ratio of 19%, excluding accumulated other comprehensive income. Robust cash flow from P&C underwriting activities and fixed-income investments reflect continued excellent underwriting and fixed-income results, respectively. The insurer continues to maintain liquidity in the form of cash and short-term investments, which provide ample liquidity to sustain business variability.
Strong balance sheet enables CNA Financial to engage in shareholder-friendly moves like dividend hikes. The company’s quarterly dividend payment has witnessed a 10-year CAGR (2013-2023) of 7.7%. The current dividend yield of 4.3% is better than the industry average of 0.3%. Riding on a disciplined execution, CNA hiked its dividend over the past couple of years.
Stocks to Consider
Some better-ranked stocks from the property and casualty insurance industry are Kinsale Capital Group, Inc. KNSL, RLI Corp. RLI and Axis Capital Holdings Limited AXS. While Kinsale Capital and RLI Corp. sport a Zacks Rank #1 (Strong Buy), Axis Capital carries a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Kinsale Capital has a solid track record of beating earnings estimates in each of the last trailing four quarters, the average being 14.77%. In the past year, KNSL has gained 58.3%.
The Zacks Consensus Estimate for KNSL’s 2023 and 2024 earnings per share is pegged at $10.32 and $12.41, indicating a year-over-year increase of 32.3% and 20.2%, respectively.
RLI Corp.’s earnings surpassed estimates in each of the last trailing four quarters, the average earnings surprise being 45.50%. In the past year, RLI Corp. has gained 11.1%.
The Zacks Consensus Estimate for RLI’s 2023 earnings has moved 2.9% north in the past seven days.
Axis Capital beat estimates in three of the last trailing four quarters and missed in one, the average being 6.50%. The Zacks Consensus Estimate for 2023 has moved 2.7% north in the past 30 days.
The Zacks Consensus Estimate for AXS’ 2023 and 2024 earnings per share is pegged at $7.70 and $8.60, indicating a year-over-year increase of 32.5% and 11.7%, respectively. In the year-to-date period, AXS has lost 3.3%.
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RLI Corp. (RLI) : Free Stock Analysis Report
Axis Capital Holdings Limited (AXS) : Free Stock Analysis Report
CNA Financial Corporation (CNA) : Free Stock Analysis Report
Kinsale Capital Group, Inc. (KNSL) : Free Stock Analysis Report
