Loews Corporation L is set to report second-quarter 2015 results on Aug 3 before the market opens. Last quarter, the company posted a negative 5.33% earnings surprise. Let’s see how things are shaping up for this announcement.
Factors Influencing This Past Quarter
Weakening ultra-deepwater and deepwater markets are expected to affect the results of Loews’ Diamond Offshore DO segment. Moreover, the current economic and competitive market conditions resulting in decreased insured exposure and lower rates continue to hurt premiums, income levels and expense ratio. These factors are expected to result in another quarter of weak results.
However, Loews’ focus on ramping up its hotel business, which is its smallest unit, remains in place. It targets a portfolio of more than 30 properties that would triple net income by 2015. As such, it is adding properties that would be accretive to earnings.
Moreover, the results of Loews’ CNA Financial CNA segment are expected to be impacted by moderate rate increases and a low interest rate environment. Nonetheless, it is expected to continue to deliver solid performance across its specialty, property and casualty, and commercial business aided by underwriting actions undertaken to improve its profitability.
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: The Earnings ESP Loews is -17.14%. This is because while the Most Accurate estimate stands at 58 cents, the Zacks Consensus Estimate is pegged higher at 70 cents.
Zacks Rank: Loews has a Zacks Rank #4 (Sell). As such, 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.
Stock to Consider
Here is one company which you may want to consider as our model shows that it has the right combination of elements to post an earnings beat this quarter:
Prudential Financial, Inc. PRU has an Earnings ESP of +0.41% and a Zacks Rank #3 (Hold).
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