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What's in Store for Hartford Financial's (HIG) Q1 Earnings?

Zacks Equity Research

The Hartford Financial Services Group, Inc. HIG will release first-quarter 2020 financial results on Apr 29, after the closing bell.

For the to-be reported quarter, we expect results to reflect decline in revenues.

Now let’s see how the company is placed before its upcoming earnings announcement.

Q1 Earnings & Revenue Expectations 
  
The Zacks Consensus Estimate for Hartford Financial’s earnings of $1.33 per share in the first quarter implies a 4.3% decrease from the prior-year reported number. Likewise, the consensus estimate for sales of $3.32 billion suggests a 30.5% decline from the year-ago reported figure.

Factors at Play for Q1 Results

Hartford Financial’s Personal Lines segment is likely to have delivered poorly in the first quarter due to higher expenses and lower earned premiums, which in turn, might have affected its revenue base.

The Zacks Consensus Estimate for core earnings from the Personal Lines segment implies a decrease of 15.9% from the prior-year reported number.

Moreover, investment income of the company might have fallen due to the low interest rate environment.

The Zacks Consensus Estimate for core earnings from Group Benefits implies a decline of 14.8% from the respective year-earlier reported numbers.

Nevertheless, core earnings from Commercial Lines are likely to have increased on the back of improved underwriting gain. This is also backed by the consensus mark of $316 million that indicates a 15.4% rise from the year-earlier reported number. The consensus mark for Commercial Line’s earned premiums of $2.3 billion suggests a 32% surge from the year-earlier reported number.

Hartford Financial is likely to have continued deploying capital efficiently on the back of its financial flexibility.

The company is expected to have incurred high expenses due to investments made in planned marketing and other growth initiatives taken in the quarter to be reported. Further, elevated expenses might have put a pressure on its margins.

What the Quantitative Model States

Our proven model does not conclusively predict an earnings beat for Hartford Financial this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of a positive surprise. But that’s not the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Earnings ESP: Hartford Financial has an Earnings ESP of -0.94%. This is because the Most Accurate Estimate is pegged at $1.32, lower than the Zacks Consensus Estimate of $1.33.  You can see the complete list of today’s Zacks #1 Rank stocks here.

The Hartford Financial Services Group, Inc. Price and EPS Surprise

The Hartford Financial Services Group, Inc. Price and EPS Surprise

The Hartford Financial Services Group, Inc. price-eps-surprise | The Hartford Financial Services Group, Inc. Quote

Zacks Rank: Hartford Financial carries a Zacks Rank #3, which increases the predictive power of ESP. However, its negative ESP leaves surprise prediction inconclusive for the stock this time around.

Highlights of Q4 Earnings and Surprise History

In the last reported quarter, the company delivered adjusted operating earnings of $1.43 per share, beating the Zacks Consensus Estimate by 6.7% on better underwriting results in Property & Casualty, a lower group disability loss ratio in Group Benefits and an improved net investment income. The bottom line also soared 83.3% year over year.

The company flaunts an impressive earnings history, having delivered a positive surprise in all the trailing four quarters, the average being 14.4%.

Stocks to Consider

Here are a few stocks worth considering with the perfect mix of elements to beat on earnings in the respective upcoming releases:

American International Group, Inc. AIG is slated to report first-quarter earnings on May 4. It has a Zacks Rank of 3 and an Earnings ESP of +1.60%.

Assurant, Inc. AIZ is set to report first-quarter earnings on May 5. The company is Zacks #3 Ranked and has an Earnings ESP of +4.28%.

Kemper Corporation KMPR is slated to announced first-quarter earnings of May 4. The stock has an Earnings ESP of +12.57% and is a #2 Ranked player.

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