On Monday, Loews Corp. (L) announced quarterly earnings that easily beat analyst estimates (see conference call transcript here). Fourth-quarter net income came in at $466 million, or $1.12/share, compared to an analyst consensus estimate of $0.84/share from FactSet Research. This is an improvement from $0.94/share for the same period the year before.
The company said this was due to higher net investment income from limited partnerships and improved trading-portfolio results.
CNA Financial Corp., the insurer controlled by Loews, also declared its first dividend since 2008, helping the stock to gain more than 4.5% during Monday's session.
The payout "demonstrates the progress we have made in restoring our financial strength," said Thomas Motamed, CNA's chief executive officer.
Loews might offer an interesting opportunity in the near-term. Below we've listed three reasons to have a closer look…
All data and industry comps sourced from Fidelity.
Interactive Chart: Compare the performance between Loews and the S&P 500 index.
Reason #1 - The Smart Money Is Buying In: Institutional and mutual fund investors have been net purchasers of the company's shares over the last two quarters, suggesting that the smart money thinks there's more upside to the stock. Institutional investors have been net buyers of 875.5K shares during the most recent quarter, vs. 15.6M net shares purchased in the previous quarter. Mutual fund investors have also been optimistic on the stock. They were net buyers of 3.0M shares during the current quarter, vs. 5.2M net shares purchased in the previous quarter.
Reason #2 - Increased Competitiveness: The company's capital spending accelerated by 56.78% over the last five years, much faster than the industry average of 2.22%. At least theoretically, this makes them more competitive over the coming years, since their operational assets are more up-to-date.
Reason #3 - Profitability: Over the last year, the company has proven itself to be more profitable than its industry competitors. Trailing twelve month (TTM) gross margin at 22.76%, higher than the industry average at 15.87%. TTM operating margin came in at 22.76%, higher than the industry average at 12.31%. The company also outperformed with its pretax margin, reporting a ratio of 19.29%, higher than the industry average at 9.73%.