ProAssurance Corporation PRA is set to report second-quarter 2015 earnings results on Aug 6, 2015. Last quarter, it posted a negative earnings surprise of 8.96%. Let us see how things are shaping up for this announcement.
Factors Affecting the Past Quarter
ProAssurance’s core business has been witnessing substantial improvement over the past few quarters as reflected by an increase in premiums. The second-quarter results are also expected to be impacted positively by growth in premiums. Moreover, the company announced an enhancement in its share repurchase program during the quarter. Increased buybacks call for lowering the share count, thereby boosting earnings per share.
However, persistent low interest rate along with reduced retention rates and investment yields remain headwinds.
Earnings Whispers
Our proven model does not conclusively show that ProAssurance is likely to beat estimates 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: ProAssurance has an Earnings ESP of 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate stand at 61 cents per share.
Zacks Rank: ProAssurance carries a Zacks Rank #3 (Hold), which increases the predictive power of ESP. However, when combined with a 0.00% ESP, surprise prediction becomes 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 finance space which, according to our model, have the right combination of elements to post an earnings beat this quarter:
AerCap Holdings N.V. AER has an Earnings ESP of +2.26% and a Zacks Rank #2 (Buy).
American Capital, Ltd. ACAS has an Earnings ESP of +8.70% and a Zacks Rank #3.
Prudential Financial, Inc. PRU has an Earnings ESP of +0.41% and a Zacks Rank #3.
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