We expect multi-line insurer Loews Corporation (L) to beat expectations when it reports third-quarter 2014 results on Nov 3.
Why a Likely Positive Surprise?
Our proven model shows that Loews is likely to beat earnings because it has the right combination of two key ingredients.
Zacks ESP: Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is at +10.45%. This is a meaningful and leading indicator of a likely positive earnings surprise for the company.
Zacks Rank: Loews carries a Zacks Rank #3 (Hold). Note that stocks with a Zacks Rank of #1, 2 and 3 have a significantly higher chance of beating earnings.
The Sell-rated stocks (#4 and 5) should never be considered going into an earnings announcement.
What is Driving the Better-Than-Expected Earnings?
Loews’ focus on ramping up its hotel business, which is its smallest unit, remain on track. It is adding properties to take the tally to more than 30 by the next three years. This in turn will help it to increase its net income not only in the quarter but also achieve the goal of tripling the same by 2015.
We expect its trading portfolio to continue performing well and drive an improvement in investment income in the quarter.
Loews’ CNA Financial (CNA) is expected to deliver better results during the quarter on the strength of its specialty, property and casualty, and commercial business.
The company surpassed the expectation in the three of last four quarters with an average beat of 4.3%.
Other Stocks to Consider
Here are some other 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:
Berkshire Hathaway Inc. (BRK.A), Earnings ESP of +3.27% and a Zacks Rank #2
American International Group, Inc. (AIG), Earnings ESP of +0.93% and a Zacks Rank #2.
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