TD Cowen has maintained a Buy rating on Allstate (NYSE: ALL) with a steady price target of $193.00 following the company's recent business transaction. Allstate has announced the divestiture of its employer voluntary benefits segment to StanCorp Financial for a cash consideration of $2.0 billion.
The deal is expected to result in an approximate $600 million gain for Allstate and increase its deployable capital by $1.6 billion.
The sold business accounted for roughly 39% of the adjusted net income for Allstate's Health & Benefits segment in the first half of 2024. The transaction is anticipated to close in the first half of 2025.
According to the firm's analysis, the additional capital from this sale may potentially expedite Allstate's share buyback program, which was anticipated to resume by the end of 2024 based on the company's earnings forecast.
The sale is a strategic move for Allstate as it adjusts its portfolio and capital allocation. The influx of deployable capital from the transaction provides Allstate with greater financial flexibility. This could lead to an earlier start to share repurchases, enhancing shareholder value ahead of the previously expected timeline.
In other recent news, Allstate Corporation (NYSE:ALL) demonstrated financial resilience in the second quarter of 2024, reporting a net income of $301 million, which was bolstered by an executed auto profit improvement plan and the acquisition of National General, both contributing to profitable growth.
The positive performance was complemented by improvements in the homeowners business and a nearly 17% year-over-year increase in net investment income. Moreover, Allstate has recently agreed to a $2 billion sale of its employer voluntary benefits business to StanCorp Financial Group, a move seen as a strategic shift to streamline its business model and focus on core offerings.
Analyst firms have responded to these developments with adjustments to their outlooks on Allstate. Piper Sandler maintained an Overweight rating for Allstate, seeing potential benefits from the divestiture of its Voluntary Benefits Business. Wells Fargo upgraded Allstate from Underweight to Equal Weight and raised its price target, acknowledging improvements in auto margins and an anticipated bolstering of capital. BMO Capital Markets, on the other hand, increased its price target, maintaining an Outperform rating, given the company's potential for organic growth and successful execution of its Transformative Growth strategy.
InvestingPro Insights
With Allstate's (NYSE:ALL) recent business transaction poised to enhance its financial position, real-time data from InvestingPro further illuminates the company's market standing. The company boasts a solid market capitalization of $47.65 billion, reflecting its significant presence in the insurance industry. Allstate's P/E ratio stands at 16.33, a measure that investors often use to gauge the company's valuation relative to its earnings. The adjusted P/E ratio over the last twelve months as of Q2 2024 is slightly lower at 15.77, suggesting a potentially more attractive valuation for investors considering the company's earnings performance.
Allstate's revenue growth over the last twelve months as of Q2 2024 is notable at 10.4%, indicating a healthy expansion of its business operations. This is coupled with a gross profit margin of 20.17%, which, while robust, aligns with the InvestingPro Tip that the company suffers from weak gross profit margins relative to its industry peers. This insight may be particularly relevant for investors considering the company's operational efficiency.
InvestingPro Tips highlight that Allstate has not only maintained dividend payments for 32 consecutive years but also raised its dividend for 13 consecutive years, signaling a strong commitment to returning value to shareholders. This is backed by a dividend yield of 2.14% as of the latest data. Moreover, analysts have revised their earnings upwards for the upcoming period, indicating optimism about the company's future performance. For those interested in further insights, there are additional InvestingPro Tips available at: https://www.investing.com/pro/ALL
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