Today's Bear of the Day is Zacks Rank #5 (Strong Sell) Loews Corp (NYSE:L). I know what you're thinking, "Dave, what do you have against movie theatres?" No, it's not that Loews. "Dave, do you work part-time at Home Depot?" No, it's not that one either. I'm talking about Loews the insurance holding company. No popcorn, no Home Depot dogs.
This Loews owns a variety of companies ranging from CNA (NYSE:CNA) property & casualty insurance, to Diamond Offshore (NYSE:DO) to a luxury hotel and resort chain. The company acts as a patient value investor with a long-term philosophy. Loews claims this gives them freedom and patience to invest opportunistically across industries.
Unfortunately as a value investor sometimes the tide of the market goes decidedly against you. Which in the long run you don't worry about from that perspective but it can make for some rough going in the short to intermediate term. And in the short run it appears like Loews is facing a bit of a headwind.
Two analysts have dropped their earnings estimates for the next year over the last 60 days. This drop in the number has helped bring consensus down from $3.85 to $3.51. Next year's numbers aren't the only estimates that have dropped for the company. This quarter analysts are now looking for 74 cents a share versus previous consensus of 79 cents. This helped take down the current year number from $3.08 down to $2.97.
A look at the historical price and consensus chart shows how Loews has struggled to find consistent growth over the course of the last several years. Analysts have always started the year with much higher expectations for the company only to drop their estimates several times over the course of the year. Sometimes these swings are on a grand scale. The 2011 consensus, for example, varied from as high as $4.60 to below $3 before numbers were finally reported.
The technical picture isn't much better for the stock. Last October is seemed like smooth sailing for L as the stock was trading near $50 a share. Since then it has taken several legs down along the way, breaking below trading range support on multiple occasions. This year began with a violent drop over the course of a week as L dropped from $47.50 to below $43 in just a matter of a few short weeks into mid-February.
From there the stock chopped through a range from $43 to $45 for a few months before a dip south of the range in mid-May. The dip was short lived as the stock rebounded to test the $44.50 level once again. A recent failure at the 25 day moving average shifted by 5 days (25x5) now sees the stock down below the May dip trading near $42. The latest gap down through support and current consolidation may be a warning of more downside to come.
Investors keen on gaining exposure to this sector of the market can look to Cigna Corp (NYSE:CI). Cigna currently carries a Zacks Rank #2 (Buy).
DIAMOND OFFSHORE (DO): Free Stock Analysis Report (email registration required)
CNA FINL CORP (CNA): Free Stock Analysis Report (email registration required)
CIGNA CORP (CI): Free Stock Analysis Report (email registration required)