The Hartford Financial Services Group, Inc. HIG is set to report first-quarter 2015 earnings results on Apr 27, 2015. Last quarter, it posted a positive earnings surprise of 3.23%. Let us see how things are shaping up for this announcement.
Factors Affecting the Past Quarter
The company’s focus on expanding its product portfolio and underwriting capabilities, strengthening its core operations, enhancing distribution effectiveness, improving the customer experience and operating efficiency, is expected to boost earnings.
Toward enhancing its product portfolio, the company designed a flexible package of management and professional liability coverages – The Hartford’s Educators Professional Choice – in the past quarter. This product is a complement to The Hartford’s general liability policy and should help educational institutions customize their liability coverage according to their needs.
Amid the high demand for tailored insurance products, this new development should help the company enhance its revenues, thereby boosting bottom line. Additionally, efficient share repurchases should make way for boosting earnings per share.
However, catastrophe exposure and a challenging regulatory environment raise concern. A weak Talcott Resolution segment is also a drag.
Earnings Whispers
Our proven model does not conclusively show that The Hartford is likely to beat earnings this quarter. That is because a stock needs to have both a positive Earnings ESP 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: The Hartford has an ESP of -7.07%. This is because the Most Accurate estimate stands at 92 cents per share while the Zacks Consensus Estimate is pegged at 99 cents per share.
Zacks Rank: The Hartford has a Zacks Rank #3 (Hold) which increases the predictive power of ESP. However, a negative ESP makes surprise prediction difficult.
We caution against Sell-rated stocks (Zacks Rank #4 and 5) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks to Consider
Here are some stocks from the insurance space which you may want to consider as our model shows that they have the right combination of elements to post an earnings beat this quarter:
Aspen Insurance Holdings Ltd. AHL with an Earnings ESP of +8.09% and a Zacks Rank #1 (Strong Buy).
Argo Group International Holdings, Ltd. AGII with an Earnings ESP of +3.41% and a Zacks Rank #3.
Assurant Inc. AIZ with an Earnings ESP of +2.70% and a Zacks Rank #3.
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