CNO (CNO) Down 29.6% 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 29.6% 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 its most recent earnings report in order to get a better handle on the important drivers.

CNO Financial's Q4 Earnings Beat Estimates, Surge Y/Y

CNO Financial’s fourth-quarter 2019 adjusted earnings per share of 47 cents beat the Zacks Consensus Estimate of 43 cents by 9.3%. The bottom line also improved 30.6% year over year, mainly on the back of solid revenues.

In the quarter under review, CNO Financial’s total revenues surged 37.4% year over year to $1069 million owing to policyholder and other special-purpose portfolios, higher fee revenues and other income plus other net realized investment gains.

Quarterly Operational Update

Total collected premiums of $972.8 million slipped 1.5% from the prior-year quarter, mainly due to weak contribution from Bankers Life segment.
New annualized premiums for life and health products amounted to $97.6 million, up 8.9% from the year-ago period.

First-year collected premiums declined 6.1% from the year-earlier quarter.

Quarterly Segment Update

Bankers Life

Total collected premiums of $711.1 million were down 2.9% year over year.
New annualized premiums for life and health products dipped 0.5% year over year.

Washington National

Total collected premiums of $181.2 million inched up 2.8% year over year.
New Annualized premiums from life and health products were $39.7 million, up 31.9% from the year-ago figure.

Colonial Penn

Total collected premiums were $77.3 million, up 2.8% year over year.

New annualized premiums from life and health products were $15.9 million, down 8.1% from the amount recorded in the comparable quarter last year.

Long-Term Care in Run-Off

Total collected premiums were $3.2 million, down 13.5% year over year.

The long-term care business was ceded under a 100% indemnity coinsurance agreement in the third quarter of 2018.

Financial Update

Unrestricted cash and cash equivalents held by CNO Financial’s holding company were $580 million as of Dec 31, 2019, down 2.4% from the level at 2018 end.

Debt-to-capital ratio was 17.5% as of Dec 31, 2019 compared with 21.4% at 2018 end.

Securities Repurchase and Divided Update

In the fourth quarter of 2019, the company returned $91 million in the form of share repurchases and dividend.

Full-Year Update

For 2019, net income came in at $409.4 million against a net loss of $315 million in 2018.

In 2019, the company returned $319 million to its shareholders in the form of share repurchases and dividends.

How Have Estimates Been Moving Since Then?

Estimates revision followed an upward path over the past two months.

VGM Scores

Currently, CNO has an average Growth Score of C, however its Momentum Score is doing a lot better with an A. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the top 40% 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

CNO has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.