Loews Corporation L is set to report first-quarter 2015 results on May 4 before the market opens. Last quarter, the conglomerate had posted a 7.55% positive earnings surprise. Let’s see how things are shaping up for this announcement.
Factors Influencing This Past Quarter
Results at Loews’ Diamond Offshore DO are likely to suffer as offshore drilling market faced challenges from soft day rates and very few long-term contracts. In addition, the market condition for ultra-deepwater and deepwater floaters remained soft, and is likely to weigh on results.
Nonetheless, Loews Hotels is on track to add of more than 30 properties that would triple net income by 2015. It is thus adding properties that would help in achieving its goal.
However, Loews’ CNA Financial CNA is likely to impress again riding on the strength of its specialty, property and casualty, and commercial business. But will this be enough to drive the company to a positive earnings surprise?
Earnings Whispers?
Our proven model does not conclusively show that Loews 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: Loews has -5.33% Earnings ESP. This is because while the Most Accurate estimate stands at 71 cents, the Zacks Consensus Estimate is pegged higher at 75 cents.
Zacks Rank: Loews has a Zacks Rank #4 (Sell). Though the company’s positive ESP increases the predictive power, we caution against stocks with Zacks Ranks #4 and 5 (Sell-rated stocks) going into the earnings announcement, especially when it is seeing negative estimate revisions.
A Stock to Consider
One of the companies in the space that you may want to consider given its favorable combination for an earnings beat this quarter is:
Arch Capital Group Ltd. AGII with Earnings ESP of +3.41% and a Zacks Rank #3 (Hold).
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