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Allstate (ALL) Up 2.1% Since Last Earnings Report: Can It Continue?

A month has gone by since the last earnings report for Allstate (ALL). Shares have added about 2.1% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Allstate due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.

Allstate's Q4 Earnings and Revenues Beat Estimates

Allstate’s fourth-quarter 2020 earnings of $5.87 per share beat the Zacks Consensus Estimate by 53.7% and also increased 87.5% year over year, led by growth in revenues. Further, revenues of $11.3 billion topped the Zacks Consensus Estimate by 4.3% and also improved 5.3% year over year, reflecting a strong performance-based investment income

Total expenses declined 5.8% year over year to $8.7 billion, mainly due to lower claims. Total policies in force as of Dec 31, 2020 were 175.9 million, up 20.5% year over year.

Net investment income of $1.19 million grew 73% year over year. The company incurred $424 million of catastrophe losses, up 43.7% year over year.

Solid Segmental Performances

Property-Liability insurance premiums of $8.61 billion decreased 1.5% year over year due to lower premium written in Allstate brand auto and Encompass, partly offset by premium growth in Allstate Brand Homeowners subsegment. The segment’s underwriting income of $1.42 billion was up 42% year over year.

Protection Service Business (which was earlier known as Service business) revenues of $518 million were up 19.4% year over year owing to higher contributions from Protection Plans, Dealer Services and Allstate Identity Protection, partly offset by a decline in revenues from Roadside Services and Arity business.

Allstate Life, Benefits and Annuities’ total premium and contract charges were $603 million, down 3.8% year over year due to lower contributions from Allstate Life and Benefits businesses.

Capital Position (as of Dec 31, 2020)

Total shareholders’ equity was $30.2 billion, up 16.1% from the level as of Dec 31, 2019.

Total assets were $126 billion, up 5% from the level on Dec 31, 2019. Adjusted return-on-equity of 19.8% was up 290 basis points year over year.

How Have Estimates Been Moving Since Then?

It turns out, estimates revision have trended upward during the past month. The consensus estimate has shifted 9.95% due to these changes.

VGM Scores

Currently, Allstate has a subpar Growth Score of D, however its Momentum Score is doing a bit better with a C. However, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Allstate has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.


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