Yahoo Finance Allstate (ALL) Down 2.5% Since Last Earnings Report: Can It Rebound?
It has been about a month since the last earnings report for Allstate (ALL). Shares have lost about 2.5% 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 the most recent earnings report in order to get a better handle on the important drivers.
Allstate Q1 Earnings Beat on Expanding Auto Premiums
Allstate reported a first-quarter 2024 adjusted net income of $5.13 per share, which surpassed the Zacks Consensus Estimate by 24.8%. The company reported a loss of $1.30 per share in the year-ago quarter.
Operating revenues of $15.4 billion rose 12% year over year in the quarter under review. The year-over-year growth was due to a 10.9% increase in Property-Liability insurance premiums earned. The top line beat the consensus mark of $15.3 billion.
The quarterly results benefited on the back of prudent rate increases, a rise in investment income, strong underwriting results, favorable weather conditions and a decline in expenses. However, the upside was partly offset by lower policies in force in Allstate Protection Auto business and premiums and contract charges from Employer voluntary benefits.
Q1 Operations
Net investment income improved 32.9% year over year to $764 million in the first quarter and beat the Zacks Consensus Estimate of $662 million. The metric benefited on the back of improved yields from the fixed-income portfolio, resulting in 23.5% year-over-year growth in market-based investment income. Performance-based investment income also rose 59.5% year over year due to an uprise in private equity valuation.
Total costs and expenses of $13.8 billion decreased 2.8% year over year and came in lower than our estimate of $14.1 billion. The year-over-year decline was due to lower property and casualty insurance claims and claims expenses.
Allstate generated a pretax income of $1.5 billion in the quarter under review against the year-ago quarter’s pretax loss of $406 million.
Total policies in force were 197.3 million as of Mar 31, 2024, up 5.7% year over year.
Catastrophe losses dropped 56.8% year over year to $731 million in the first quarter.
Segmental Performances
The Property-Liability segment recorded premiums earned of $12.9 billion, which advanced 10.9% year over year on the back of increased average premiums resulting from rate hikes. The metric beat our estimate of $12.8 billion. The Allstate brand gained from improved auto and homeowners’ average premiums, while average premium growth and an increase in the number of policies contributed to the results of National General.
Underwriting income in the unit amounted to $898 million in the first quarter against the prior-year quarter’s underwriting loss of $1 billion. The metric was aided by a rise in earned premiums, reduced catastrophe losses and favorable underlying loss experience. The combined ratio of 93% improved 1,560 basis points (bps) year over year in the quarter under review and came lower than our estimate of 97.1%.
The Protection Services segment’s revenues grew 12.2% year over year to $753 million in the first quarter, thanks to strength in Allstate Protection Plans. However, the figure fell short of the consensus mark by 2.2%. Adjusted net income of $54 million improved 58.8% year over year on the back of Allstate Roadside and Allstate Protection Plans.
The Allstate Health and Benefits segment reported premium and contract charges of $478 million, which improved 3.2% year over year in the quarter under review and beat the Zacks Consensus Estimate of $469 million and our estimate of $470 million. The unit’s performance was driven by sound individual health and group health results. Adjusted net income remained stable year over year at $56 million, which lagged the consensus mark of $65 million.
Financial Update (as of Mar 31, 2024)
Allstate exited the first quarter with a cash balance of $850 million, which increased from $722 million at 2023-end. Total assets of $105.2 billion increased from $103.4 billion at 2023-end.
Debt amounted to $7.9 billion, which remained stable from 2023-end.
Total shareholders’ equity of $18.6 billion increased from $17.8 billion at 2023-end.
Book value per common share was $62.27 as of Mar 31, 2024, which grew from $58.65 at 2023-end.
The adjusted net income return on Allstate’s common shareholders’ equity in the trailing 12-month period was 11.3%. The metric was recorded at a negative figure of 6.7% in the prior-year comparable period.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended upward during the past month.
The consensus estimate has shifted 21.2% due to these changes.
VGM Scores
Currently, Allstate has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with a C. 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 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.
Performance of an Industry Player
Allstate belongs to the Zacks Insurance - Property and Casualty industry. Another stock from the same industry, First American Financial (FAF), has gained 2.2% over the past month. More than a month has passed since the company reported results for the quarter ended March 2024.
First American Financial reported revenues of $1.42 billion in the last reported quarter, representing a year-over-year change of -1.5%. EPS of $0.45 for the same period compares with $0.49 a year ago.
For the current quarter, First American Financial is expected to post earnings of $1.17 per share, indicating a change of -13.3% from the year-ago quarter. The Zacks Consensus Estimate has changed -2% over the last 30 days.
First American Financial has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of D.
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