The Hartford Financial Services Group, Inc. (HIG) is set to report second-quarter 2014 earnings results on Jul 30. Last quarter, it reported a positive earnings surprise of 26.9%. Let us see how things are shaping up for this announcement.
Factors Affecting the Past Quarter
Hartford Financial’s focus on core business enhancement should help it improve earnings in the quarter. The collaboration with IBM in Apr 2014 should also improve core businesses and drive growth. Moreover, Hartford Financial’s debt repayment initiatives should boost financial flexibility and thereby help the company to execute its capital management plans and generate shareholder value.
However, the Hartford Financial’s exposure to catastrophic events, the lower invested assets in Talcott Resolution and a decline in income from repurchase agreements are likely to weigh on the company’s earnings.
Earnings Whispers?
Our proven model does not conclusively show that Hartford Financial is likely to beat earnings this quarter. That is because a stock needs to have both a positive Earnings ESP (Expected Surprise Prediction) and a Zacks Rank of #1, 2 or 3 for this to happen. That is not the case here as you will see below.
Zacks ESP: Hartford Financial has an ESP of 0.00%. This is because the Most Accurate estimate and the Zacks Consensus Estimate both stand at 68 cents per share.
Zacks Rank: Hartford Financial’s Zacks Rank #3 (Hold) increases the predictive power of ESP, but when combined with a zero ESP, it makes surprise prediction difficult.
We caution against stocks with Zacks Rank #4 and 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions momentum.
Other Stocks to Consider
Here are some companies in the financial services space you may want to consider as our model shows that they have the right combination of elements to post an earnings beat this quarter:
Credit Acceptance Corp. (CACC) has Earnings ESP of +2.39% and a Zacks Rank #2 (Buy).
Arch Capital Group Ltd. (ACGL) has Earnings ESP of +5.10% and a Zacks Rank #2.
Santander Consumer USA Holdings Inc. (SC) has Earnings ESP of +6.45% and a Zacks Rank #3.
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