StanCorp Financial Group Inc. (SFG) is set to report fourth-quarter and full-year 2014 results on Jan 29. Last quarter, the company posted a 31.06% surprise. Let’s see how things are shaping up for this announcement.
Factors Influencing This Past Quarter
Employee Benefits premium is expected to witnessed improvement as sales rise on increased proposal activity. Employee Benefits ratio is also expects to show improvement. Management guided a benefit ratio of 80–82% for 2014. Nonetheless, lower discounts might be a drag.
The Asset Management segment is expected to deliver another quarter of solid earnings on higher administrative fees resulting from an increase in the asset base.
Continued share buybacks, resulting in a lower share count, would also give a boost to the bottom line.
However, a soft interest rate environment might weigh on the upside.
Earnings Whispers?
Our proven model does not conclusively show that Principal Financial 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. This is not the case here as you will see below.
Zacks ESP: StanCorp Financial has a 0.00% Earnings ESP. This is because both the Most Accurate estimate and the Zacks Consensus Estimate stand at $1.35.
Zacks Rank: StanCorp Financial carries a Zacks Rank #2 (Buy). Though a Zacks Rank #1, 2 or 3 increases the predictive power of ESP, the company’s ESP of 0.00% makes surprise prediction difficult.
We caution against stocks with Zacks Ranks #4 and 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks to Consider
Here are some companies you may want to consider as these have the right combination of elements to post an earnings beat this quarter:
Arch Capital Group Ltd. (ACGL) Earnings ESP of +1.92% and a Zacks Rank #1 (Strong Buy).
The Allstate Corp. (ALL), Earnings ESP of +1.81% and a Zacks Rank #1.
The Chubb Corp. (CB), Earnings ESP of +1.39% and a Zacks Rank #1.
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