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Will Catastrophe Loss Impact Loews’ (L) Earnings in Q4?


Loews Corporation L is slated to report fourth-quarter 2017 results on Feb 12 before the market opens. Last quarter, the company delivered a positive earnings surprise of 2200.00%.

Let’s see, how things are shaping up for this announcement.

Factors to be Considered This Quarter

With the occurrence of the California wildfires in the fourth quarter, Loews is likely to have experienced higher catastrophe loss in the soon-to-be-reported quarter. This in turn might hurt the company’s underwriting profitability and also render volatility to its earnings. In fact, the Zacks Consensus Estimate for fourth-quarter earnings is pegged at 72 cents per share, reflecting an 8.9% year-over-year decline.

Moreover, increase in expenses is anticipated to have weighed on the desired margin expansion, hurting the Multi line insurer’s overall performance in turn.

Nonetheless, the company has possibly displayed better-than-expected results at Loews Hotels in the soon-to-be-reported period. In fact, this particular segment has benefitted from higher equity income from Universal Orlando joint-venture properties, reflected in the segment’s improved earnings and revenues.

Additionally, the company’s Diamond Offshore DO segment gained from higher contract drilling revenues and cost containment. The yet-to-be reported quarter is estimated to have experienced these favorable factors leading to higher contribution from Diamond Offshore.

Earnings Whispers

Our proven model does not conclusively show that Loews is likely to beat on earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a favorable Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. But that is not the case here as you will see below.

Zacks ESP: Loews has an Earnings ESP of -11.11%. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.

Loews Corporation Price and EPS Surprise

Loews Corporation Price and EPS Surprise | Loews Corporation Quote

Zacks Rank: Loews holds a Zacks Rank #2, which increases the predictive power of ESP. However, a company needs a positive ESP to be confident about an earnings surprise. Thus, this combination leaves surprise prediction inconclusive.

We caution against all Sell-rated stocks (#4 or 5) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks to Consider

Some stocks worth considering from the finance sector with the right combination of elements to surpass estimates this time around are as follows:

Brighthouse Financial, Inc. BHF is set to report fourth-quarter earnings on Feb 12. The company has an Earnings ESP of +2.27% and a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Sun Life Financial Inc. SLF has an Earnings ESP of +0.71% and a Zacks Rank #3. The company is slated to release fourth-quarter earnings on Feb 14.

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