On Aug 12, 2014, Allstate Corporation (ALL) scaled a 52-week high of $60.19 after posting mixed second-quarter results which included a 26.3% positive earnings surprise. This major insurance firm has maintained an earnings streak in the last four quarters with an average beat of 18.8%.
In fact, shares of Allstate rose nearly 5.7% over the last few trading sessions to close at $60.15, since the company reported second-quarter earnings results on Jul 30, 2014. Furthermore, the year-to-date return of the stock is 10.28%, much above the S&P 500’s return of 4.62% as well as that of other players in the insurance industry like Travelers Inc. (TRV) and Lincoln National Corp. (LNC) that generated returns of 0.61% and –0.50%, respectively over the same period.
During the second quarter, Allstate’s top line surpassed our estimates and increased 0.8% year over year. Additionally, the Property-Liability’s earned premiums rose during the quarter owing to decent performance across the Allstate, Encompass and Esurance brands, modest growth in new business and customer retention across standard auto and personal lines’ businesses.
During the second quarter, Allstate’s investment position remained strong, reflecting increased fixed income valuations and positive equity market performance in 2014. Moreover, Allstate delivered impressive performance in terms of deleveraging its portfolio, reflected by the 200 basis points improvement in the debt-to-capital ratio.
Allstate’s commitment to return more value to its shareholders is evident from the completion of 40% of the $2.5 billion share repurchase program authorized in Feb 2014 and the consistent dividend payouts.
Currently, Allstate caries a Zacks Rank #3 (Hold). Investors interested in the property and casualty insurance space may consider stocks like Endurance Specialty Holdings Ltd. (ENH), which sports a Zacks Rank #1 (Strong Buy).
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