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TheStreet Open House

Why Loews (L) Stock Is Gaining Today

NEW YORK (TheStreet) -- Shares of Loews Corp. (L) are up 0.62% to $42.36 after the company said that it reached an agreement to sell its wholly-owned subsidiary, HighMount Exploration & Production, LLC. 

The transaction is expected to be completed before the end of the year. Terms of the deal were not disclosed. 

In the second quarter, Loews recognized an after-tax impairment charge of $167 million in relation to HighMount.  

Must Read: Warren Buffett’s 25 Favorite Stocks

 

Loews was caught off guard by a decline in natural gas prices, according to Bloomberg.

EnerVest Ltd., a private-equity firm that invests in oil and gas production, will purchase HighMount. Loews purchased HighMount in 2007 for about $4 billion, Bloomberg said.

TheStreet Ratings team rates LOEWS CORP as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:

"We rate LOEWS CORP (L) a BUY. This is driven by multiple strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its growth in earnings per share, good cash flow from operations and largely solid financial position with reasonable debt levels by most measures. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • LOEWS CORP has improved earnings per share by 17.9% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past year. We feel that this trend should continue. During the past fiscal year, LOEWS CORP increased its bottom line by earning $1.71 versus $1.43 in the prior year. This year, the market expects an improvement in earnings ($2.95 versus $1.71).
  • Net operating cash flow has significantly increased by 835.23% to $772.00 million when compared to the same quarter last year. In addition, LOEWS CORP has also vastly surpassed the industry average cash flow growth rate of -72.50%.
  • L, with its decline in revenue, underperformed when compared the industry average of 10.6%. Since the same quarter one year prior, revenues slightly dropped by 0.6%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
  • Despite currently having a low debt-to-equity ratio of 0.54, it is higher than that of the industry average, inferring that management of debt levels may need to be evaluated further.
  • The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the Insurance industry and the overall market on the basis of return on equity, LOEWS CORP underperformed against that of the industry average and is significantly less than that of the S&P 500.
  • You can view the full analysis from the report here: L Ratings Report

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