Allstate (ALL) Down 1.1% 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 1.1% 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 drivers.
Allstate Q1 Earnings Beat Estimates, Revenues Miss
Allstate’s first-quarter 2020 earnings of $3.54 per share beat the Zacks Consensus Estimate by 13.46% and also soared 53.9% year over year, led by improved premiums and policies in force.
Revenues of $10.1 billion missed the Zacks Consensus Estimate by 1.98% and also declined 8.3% year over year due to weak net investment income, partly offset by higher premiums.
Total expenses inched up 0.5% year over year to $9.4 billion due to $210-million Shelter-in-Pay expense.
The company incurred a catastrophe loss of $211 million, down 69% year over year.
Total policies in force as of Mar 31, 2020 were 153.7 million, up 24.1% year over year.
Net investment income of $421 million dropped 35% year over year.
Solid Segmental Performance
Property-Liability insurance premiums of $8.88 billion increased 4.4% year over year, driven by a solid contribution from Allstate brand auto and Allstate brand homeowners, partly offset by lower premiums from Ensurance and Encompass brands. The segment’s underwriting income of $1.35 billion was up 91% year over year.
Service Business’ revenues were $430 million, up 9.7% year over year owing to higher contributions from Protection Plans, Dealer Services, Arity and Indentity Protection businesses, partly offset by soft revenues from Roadside Servcies.
Allstate Life, Benefits and Annuities’ total premium and contract charges were $617 million, down 1.8% year over year due to dwindled contribution from Allstate Life, Benefits as well as Annuities.
Capital Position (as Mar 31, 2020)
Total shareholders’ equity was $24.2 billion, down 7% from the level as of Dec 31, 2019.
Total assets were $116.1 billion, down 3.2% from the level on Dec 31, 2019.
The company’s debt-to-equity ratio increased to 21.5 from 20.3 as of Dec 31, 2019.
Adjusted return-on-equity of 18.5% was up 470 basis point year over year.
Book value per share was $69.67, up 9.6% year over year.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended downward during the past month.
VGM Scores
Currently, Allstate has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of A on the value side, putting it in the top 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 trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Allstate has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
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