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Loews (L) Q4 Earnings Beat Estimates, Revenues Improve Y/Y


Loews Corporation L reported fourth-quarter 2017 operating earnings of 83 cents per share, beating the Zacks Consensus Estimate of 72 cents. The bottom line however, declined 3.5% year over year.

Loews Corporation Price, Consensus and EPS Surprise

Loews Corporation Price, Consensus and EPS Surprise | Loews Corporation Quote

Although earnings benefited from high performance at CNA Financial CNA and Loews Hotels, lower results at Diamond Offshore Drilling DO weighed on the upside.

Including net gain of 59 cents per share from the enactment of the Tax Cuts and Jobs Act of 2017, net income came in at $1.43.

Behind the Headlines

Operating revenues of $3.6 billion increased 6.7% year over year. Rise in insurance premiums and other revenues aided this improvement.

Total expenses rose 7.5% year over year to $3.1 billion, mainly due to higher contract drilling expenses and other operating costs.

Book value as of Dec 31, 2017 was $57.83 per share, up about 7.2% from $53.96 as of Dec 31, 2016.

Full-Year Highlights

Operating earnings of $2.86 per share surpassed the Zacks Consensus Estimate of $2.80. The bottom line improved 48% year over year.

Operating revenues of $13.7 billion grew 4.8% year over year. Moreover, the top line outpaced the consensus mark of $13.2 billion

Segment Details

CNA Financial’s revenues increased nearly 2% from the prior-year quarter to $2.4 billion. Its reported net income attributable to Loews Corp. is $193 million, reflecting a decline of 11.1% from the year-ago quarter due to the impact of the Tax Act. The quarter witnessed higher favorable net prior-year development and improved current accident year underwriting results from its property and casualty operations, partially offset by lower net investment income.

Boardwalk Pipeline’s BWP revenues decreased 4.8% year over year to $338 million. Net income attributable to Loews Corp., increased nearly 12 times to $320 million, driven by net benefit related to the Tax Act. The quarter witnessed higher revenues from growth projects, offset by a decrease in storage and parking and lending revenues plus a decline in revenues associated with the sale of the Flag City processing plant and the restructuring of a firm transportation customer contract.

Loews Hotels’ revenues improved 11.7 % year over year to $172 million. Income attributable to Loews Corp. increased eight fold to $40 million. The quarter witnessed an improved performance at several large properties including the Loews Miami Beach Hotel, which had been under renovation in the year-ago quarter, and higher equity income from the Universal Orlando joint venture properties.

Diamond Offshore’s revenues fell 8.7% year over year to $356 million. Net loss attributable to Loews Corp. was $52 million compared with the earnings of $58 million in the year-earlier quarter. The period witnessed lower contract drilling revenues, higher contract drilling expense, an impairment charge related to the carrying value of a drilling rig plus restructuring and separation costs.

Share Repurchase Update

The company bought back 4.8 million shares for $237 million in 2017. Subsequently through Feb 9, 2018, the company repurchased another 4.3 million shares for $218 million.

Zacks Rank

Loews Corp. has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks Rank #1 (Strong Buy) stocks here.

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