Will Assurant (AIZ) Earnings Keep its Earnings Streak Alive?

Assurant Inc. AIZ is scheduled to report its second-quarter 2014 results after the market closes on Jul 23.

In the last quarter, this multi-line insurer delivered a 7.7% positive earnings surprise. The average beat for the trailing four quarters is 8.0%.

Will Assurant deliver a positive earnings surprise this quarter as well?  Let's see what factors might have influenced the earnings report this time around.

Factors Likely to Influence Q2 Results

The company's Solutions segment is expected to generate higher earnings from its mobile business, expense saving from prior restructuring actions and earnings accretion from the recent acquisition of mobile phone insurance provider LifeStyle Group.

We also expect Assurant's Employee Benefit segment to see higher earnings from growth in sales of voluntary products.

However, earnings at the company's Specialty Property segment may see a drag from lower lender-placed business, as real estate market gains strength. During the quarter, the segment acquired StreetLinks LLC, to expand appraisal services for the mortgage industry. This transaction will, however, add to earnings next year.

Assurant's Health segment will continue to weigh upon the company's overall earnings. Higher commission on sales and higher tax liabilities related to the health care reform that was experienced during the first quarter is also expected to have drained earnings in the second quarter.   
 

Earnings Whispers?

Our proven model does not conclusively show that Assurant is likely to beat the Zacks Consensus Estimate in the second quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy) or at least 2 (Buy) or 3 (Hold) for this to happen. But this is not the case here as elaborated below.

Zacks ESP: Assurant's Most Accurate estimate is pegged at $1.53 per share, which is in line the Zacks Consensus Estimate. The Earnings ESP is thus 0.00%.

Zacks Rank: Assurant has a Zacks Rank #3 (Hold). Though Zacks Rank #1, 2 or 3 increases the predictive power of ESP, the company's ESP of 0.00% makes surprise prediction difficult.

Other Stocks to Consider

Here are some companies you may want to consider as our model shows that these have the right combination of elements to post an earnings beat this quarter:  

Aetna Corp. AET, Earnings ESP of +2.5% and Zacks Rank #1.

Cigna Corp. CI, Earnings ESP of +2.2% and a Zacks Rank #3.

Lincoln National Corporation LNC, Earnings ESP of +1.5% and a Zacks Rank #2.
 

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
AETNA INC-NEW AET: Free Stock Analysis Report
 
ASSURANT INC AIZ: Free Stock Analysis Report
 
CIGNA CORP CI: Free Stock Analysis Report
 
LINCOLN NATL-IN LNC: Free Stock Analysis Report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research