Why Allstate (ALL) Is Up Today

NEW YORK (TheStreet) -- Allstate (ALL) gained 5.5% to $54.28 Thursday after beating analyst expectations in its fourth-quarter earnings report.

The insurance company posted earnings of $1.70 a share for the fourth quarter. Analysts surveyed by Thomson Reuters estimated earnings of $1.38 a share. Allstate reported revenue of $6.95 billion, compared to analyst estimates of $6.89 billion.

Losses from natural disasters fell almost 90% to $117 million in the quarter. The year-ago quarter included $1.12 billion in losses from hurricane Sandy.

As a result of the decline in catastrophe losses Allstate's home insurance business recorded a combined ratio of 66.6. The combined ratio is the percentage of premium revenue paid out in claims.

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

"We rate ALLSTATE CORP (ALL) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, attractive valuation levels, good cash flow from operations and increase in stock price during the past year. We feel these strengths outweigh the fact that the company has had sub par growth in net income."

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

  • The revenue growth came in higher than the industry average of 8.9%. Since the same quarter one year prior, revenues slightly increased by 4.1%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • Although ALL's debt-to-equity ratio of 0.30 is very low, it is currently higher than that of the industry average.
  • Net operating cash flow has significantly increased by 78.31% to $1,505.00 million when compared to the same quarter last year. In addition, ALLSTATE CORP has also vastly surpassed the industry average cash flow growth rate of -27.66%.
  • Compared to where it was a year ago today, the stock is now trading at a higher level, regardless of the company's weak earnings results. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
  • You can view the full analysis from the report here: ALL Ratings Report

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