A month has gone by since the last earnings report for Allstate (ALL). Shares have added about 1.1% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Allstate due for a pullback? 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.
Allstate Q4 Earnings Beat Estimates
Allstate Corporation’s fourth-quarter 2018 earnings of $1.24 per share beat the Zacks Consensus Estimate by 22.8% but decreased 40.7% on a year-over-year basis.
The decrease was due to heavy catastrophe loss as well as a decline in revenues.
Revenues came in at $9.48 billion, outpacing the Zacks Consensus Estimate by 8.8%. The top line was down 5.8% year over year due to a decline in net investment income.
In the quarter under review, total expenses increased 10.5% year over year to $9.84 billion on higher property and casualty insurance claims, and claims expense and operating costs.
The company incurred catastrophe loss of $963 million, which was 60.8% higher year over year.
Total policies in force as of Dec 31, 2018 were 113.9 million, up 38.4% year over year.
Net investment income of $786 million declined 13.9% year over year due to lower fixed income and equity valuations.
Solid Segmental Performance
Property-Liability insurance total revenues of $8.3 billion declined 3.9% year over year due to lower investment income, partly offset by increase in premium and other revenues.
Service Businesses’ total revenues were $356 million, up 27% year over year. This upside was primarily driven by higher insurance premium, other revenues and net investment income.
Allstate Life’s total revenues of $495 million increased 2.1% year over year, driven by growth in premiums and other revenues.
Allstate Benefits’ total revenues remained almost unchanged at $292 million as the increase in premium and net investment income was almost offset by realized capital losses.
Allstate Annuities’ revenues of $63 million fell from $375 million in the year-ago quarter due to a decline in net investment income and high realized capital losses.
Share Buyback and Dividend
Allstate returned $614 million to its shareholders in common stock dividends and repurchased shares worth $2.2 billion in 2018.
Capital Position (As of Dec 31, 2018)
Total shareholders’ equity was $21.3 billion, down 5.5% year over year.
Total assets were $81.3 billion, up 1.9% year over year.
Long-term debt of $6.45 billion increased 1.6% year over year.
Ratio of debt-to-equity was 30.3%, up 210 basis points year over year.
Adjusted return on equity of 14.8% expanded 140 basis points year over year.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in fresh estimates.
VGM Scores
At this time, Allstate has an average Growth Score of C, though it is lagging a bit on the Momentum Score front with a D. However, 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 B. 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. It comes with little surprise Allstate has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
The Allstate Corporation (NYSE:ALL): Free Stock Analysis Report
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