XL Group plc (XL) is set to report third-quarter 2014 results on Oct 27 after the market closes. Last quarter, the company posted a 22.89% positive earnings surprise. Let’s see how things are shaping up for this announcement.
Factors Influencing This Past Quarter
We expect XL Group’s results to benefit from its expanded product portfolio. The company launched a policy to consolidate its cyber insurance portfolio. Its divestiture of XL Life Reinsurance will intensify its focus on the core property and casualty business and add flexibility to pursue capital management initiatives.
A benign catastrophe environment will help in delivering better underwriting results.
Nonetheless, a soft interest rate environment will likely weigh on investment results. Higher expenses might also restrict margin expansion. XL Group expects operating expenses for 2014 to be higher than 2013 by mid single digits.
Earnings Whispers
Our proven model does not conclusively show that XL Group is likely to beat earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 for this to happen. That is not the case here as you will see below.
Zacks ESP: XL Group has 0.00% Earnings ESP. This is because the Most Accurate estimate and the Zacks Consensus Estimate both stand at 64 cents.
Zacks Rank: XL Group’s Zacks Rank #3 (Hold) increases the predictive power of ESP. However, when combined with Earnings ESP of 0.00%, surprise prediction becomes difficult.
Stocks to Consider
Here are some companies you may want to consider as our model shows that these have the right combination of elements to post an earnings beat this quarter:
Endurance Specialty Holdings Ltd (ENH), Earnings ESP of +3.95% and a Zacks Rank #1 (Strong Buy).
Arch Capital Group Ltd. (ACGL), Earnings ESP of +2.08% and a Zacks Rank #2 (Buy).
The Allstate Corporation (ALL), Earnings ESP of +2.21% and a Zacks Rank #2.
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