Wednesday, December 8, 2010

Why Allstate (NYSE:ALL) Continues to Miss Earnings

Noting that Allstate (NYSE:ALL) has a terrible record on meeting EPS estimates, FBR Capital talks on why they continue to underperform in that key metric.

FBR says, "Since the end of 4Q06, Allstate has missed earnings estimates in 12 out of the past 15 quarters, book value has grown a modest 1.8% despite retained earnings and a massive rally in the bond market, and the stock has fallen by more than 50% (S&P 500 off about 15%). Catastrophe losses and poor decisions in the investment portfolio are partly to blame. In addition, the company’s reserves reversed directions (i.e., from redundancy to deficiency), the life operation wreaked havoc on both the income statement and balance sheet, and other strategic missteps just added insult to injury."

FBR Capital maintains an "Outperform" on Allstate, which closed Tuesday at $30.45, up by $0.28, or 0.93 percent. FBR has a price target on them of $43.

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