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Allstate Upped to Strong Buy; Is It in Your Portfolio Now? - Analyst Blog

Zacks Equity Research
Updated

On Jan 8, 2015, Zacks Investment Research upgraded The Allstate Corp. (ALL) by a notch to a Zacks Rank #1 (Strong Buy) from a Zacks Rank #2 (Buy).

Why the Upgrade?

Allstate has witnessed positive earnings estimate revisions based on its steady growth momentum throughout 2014, also reflected by its solid performance ahead of its fourth-quarter 2014 earnings slated to release early next month.

Lower-than-expected catastrophe losses and improved core insurance in the fourth quarter, amid a secure financial leverage and accelerated capital deployment also justify the appreciation.Moreover, Allstate’s underlying combined ratio within the targeted range of 87% to 89% score well with the ratings agencies.

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Additionally, this property-casualty insurer delivered positive earnings surprises for four straight quarters with an average beat of 16.4%. Even the third-quarter 2014 operating earnings of $1.39 per share exceeded the Zacks Consensus Estimate by 2.2%. However, it fell short of the year-ago quarter figure by 9.2% due to higher catastrophe losses. Results reflected higher premiums and policies-in-force as well as client retention across the Allstate, Esurance and Encompass brands.

Upward estimate revisions witnessed by Allstate reflect optimism. The Zacks Consensus Estimate for 2014 and 2015 moved north by 0.8% and 0.9% to $5.22 and $5.77 per share, respectively, in the last 60 days. Notably, earnings are expected to jump 10.4% on a year-over-year basis in 2015, reflecting improved momentum in the upcoming quarters.

Moreover, the Most Accurate estimate for Allstate’s 2014 and 2015 earnings currently stand at $5.44 and $6.25 a share, translating into Earnings ESP of +4.2% and +8.3%, respectively. This indicates earnings beat possibilities for both years.

Other Stocks to Consider

Investors interested in the insurance industry may also consider other favorably-ranked stocks like Arch Capital Group Ltd. (ACGL), Everest Re Ltd. (RE) and National General Holdings Corp. (NGHC), sporting the same Zacks Rank as Allstate.


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ALLSTATE CORP (ALL): Free Stock Analysis Report
 
EVEREST RE LTD (RE): Free Stock Analysis Report
 
ARCH CAP GP LTD (ACGL): Free Stock Analysis Report
 
NATIONAL GNL HL (NGHC): Free Stock Analysis Report
 
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Zacks Investment Research