Yahoo Finance Here's Why Investors Should Hold Allstate (ALL) Stock Now
The Allstate Corporation ALL is benefiting from growing property and casualty (“P&C”) insurance premiums and acquisitions. Cost-saving initiatives enable it to achieve operational efficiencies.
Zacks Rank & Price Performance
Allstate carries a Zacks Rank #3 (Hold) at present.
The stock has gained 1.7% in the past month compared with the industry’s 4.1% growth. The Finance sector and the S&P 500 composite index have increased 2.8% and 7%, respectively, in the same time frame.
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Robust Growth Prospects
The Zacks Consensus Estimate for Allstate’s 2023 earnings is pegged at $6.54 per share. A loss of 97 cents per share was reported in the prior year. The same for revenues stands at $52.6 billion, implying an 0.3% increase from the prior-year actual.
The consensus mark for 2024 earnings is pegged at $13.72 per share, suggesting a more than two-fold increase from the 2023 estimate. The same for revenues stands at $56 billion, which indicates a rise of 6.3% from the 2023 estimate.
Decent Surprise History
ALL’s earnings outpaced estimates in three of the trailing four quarters and missed the mark once, the average being 8.38%.
Key Business Tailwinds
Revenues of Allstate continue to benefit on the back of higher P&C insurance premiums that stem from continued rate increases. Management remains optimistic about implementing additional rate hikes in its auto insurance business this year. With continued inflationary pressure, prudent rate increases will better equip ALL to counter escalating auto part expenses or labor costs.
An improving interest rate scenario is likely to boost the investment yields of insurers and the investment portfolio of Allstate, comprising a significant proportion of fixed-income securities, is likely to reap benefits from Fed rate hikes.
The insurer resorts to acquisitions in a bid to expand its capabilities and nationwide presence. Such buyouts provide an impetus to Allstate’s top-line growth as well. One such example is the National General acquisition in 2021 which has continued boosting ALL’s revenue growth.
Allstate’s efforts to emerge as a cost-effective digital insurer require special mention, keeping in mind the ongoing digitization infused across every sphere of life. The decline in operational costs enables it to divert funds for growth and tech-related investments. Allstate also undertakes divestitures to extract capital out of underperforming businesses and invest the funds in high-growth areas.
Allstate boasts an impressive financial position backed by a sound balance and strong cash-generating abilities. It leverages its financial strength to sustain its active capital deployment record to shareholders through share buybacks and dividend hikes. Last year, it repurchased shares worth $2.5 billion. In February 2023, management approved a 4.7% hike in the quarterly dividend. Its dividend yield of 3.1% compares favorably with the industry’s figure of 0.4%.
Stocks to Consider
Some top-ranked stocks in the insurance space are Kinsale Capital Group, Inc. KNSL, Heritage Insurance Holdings, Inc. HRTG and The Travelers Companies, Inc. TRV. While Kinsale Capital sports a Zacks Rank #1 (Strong Buy), Heritage Insurance and Travelers carry a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Kinsale Capital’s earnings surpassed estimates in each of the last four quarters, the average being 13.83%. The Zacks Consensus Estimate for KNSL’s 2023 earnings indicates a 27.2% rise, while the same for revenues suggests an improvement of 32.3% from the respective prior-year tallies. The consensus mark for KNSL’s 2023 earnings has moved 0.6% north in the past 30 days.
The bottom line of Heritage Insurance outpaced estimates in two of the trailing four quarters and missed the mark twice, the average being 98.52%. The Zacks Consensus Estimate for HRTG’s 2023 earnings is pegged at 10 cents per share. A loss of $2.41 per share was reported in the prior year. The same for revenues suggests an improvement of 3.4% from the respective prior-year figures. HRTG boasts an impressive Value Score of A.
Travelers’ earnings outpaced estimates in three of the trailing four quarters and matched the mark once, the average being 16.7%. The Zacks Consensus Estimate for TRV’s 2023 earnings indicates a 14% rise, while the same for revenues suggests an improvement of 9.3% from the respective prior-year tallies. The consensus mark for TRV’s 2023 earnings has moved up 0.4% in the past seven days.
Shares of Kinsale Capital and Travelers have gained 10.2% and 0.7%, respectively, in the past month. However, the Heritage Insurance stock has lost 6.4% in the same time frame.
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The Travelers Companies, Inc. (TRV) : Free Stock Analysis Report
The Allstate Corporation (ALL) : Free Stock Analysis Report
Heritage Insurance Holdings, Inc. (HRTG) : Free Stock Analysis Report
Kinsale Capital Group, Inc. (KNSL) : Free Stock Analysis Report
