Why Is Allstate (ALL) Down 8.2% Since Last Earnings Report?

It has been about a month since the last earnings report for Allstate (ALL). Shares have lost about 8.2% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Allstate 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 catalysts.

Allstate Beats Earnings and Revenue Estimates in Q4

Allstate Corporation’s fourth-quarter 2019 earnings of $3.13 per share beat the Zacks Consensus Estimate by 0.32% and were up 152.4% year over year, led by increase in premiums and policies in force.

Revenues of $11.5 billion outpaced the Zacks Consensus Estimate by 6.5%. The top line was up 21% year over year, driven by an increase in premiums.

Total expenses declined 9.3% year over year to $9.2 billion, driven by lower property and casualty insurance claims.

The company incurred catastrophe loss of $295 million, down 69.4% year over year.

Total policies in force as of Dec 31, 2019 were 145.9 million, up 27.7% year over year.

Net investment income of $689 million decreased 12.3% year over year.

Solid Segmental Performance

Property-Liability insurance premiums of $8.7 billion increased 4.4% year over year driven by policy growth and higher average premiums in the Allstate and Esurance brands. The segment’s underwriting income of $1000 million was up from $286 million in the year-ago quarter.

Service Business’ revenues were $434 million, up 21.9% year over year. This upside was primarily driven by higher contribution from the company’s Protection Plans, Dealer Services and Arity business, partly offset by decline in premium from Roadside Services.

Allstate Life, Benefits and Annuities total premium and contract charges were $627 million, unchanged year over year, due to slightly higher contribution from Life and Benefits business, partly offset by decline in Annuities premium and contract charges.

Capital Position (as of Dec 31, 2019)

Total shareholders’ equity was $26 billion, up 22.1% year over year.
Total assets were $120 billion, up 6.9% year over year.

The company’s financial leverage position improved with a 480 basis point reduction in debt-to-equity ratio to 25.5%.

Adjusted return on equity of 16.9% was up 70 basis point year over year.

Adjusted book value per share was $67.29, up 17% year over year.

Share Buyback and Dividend Buyback

In 2019, the company returned $653 million to common shareholders in common stock dividends. It completed a $3 billion share repurchase program in January 2020.

How Have Estimates Been Moving Since Then?

It turns out, estimates revision have trended upward during the past month.

VGM Scores

Currently, Allstate has a great Growth Score of A, though it is lagging a bit on the Momentum Score front with a B. Following the exact same course, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Allstate has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.