Why Should You Avoid Adding Loews To Your Portfolio Now?

On Dec 13, Zacks Investment Research downgraded Loews Corporation L to a Zacks Rank #5 (Strong Sell).

Why the Downgrade?    
    
Loews witnessed declining earnings estimates following weaker-than-expected third-quarter results.

The company delivered earnings of 47 cents per share that missed the Zacks Consensus Estimate by about 30% and declined 43% year over year.  Lower earnings at CNA Financial CNA and Diamond Offshore DO were largely responsible for a softer quarter. In addition, investment income also witnessed a downturn of about 25% year over year due to limited partnership and equity-based investments.

Results at CNA Financial suffered from lower net investment income, lesser favorable net prior-year development, and loss on a coinsurance transaction stemming from its annuity and pension deposit business divestiture. On the other side, lower rig utilization and an impairment loss related to the carrying value of six semisubmersible rigs weighed on the results of Diamond Offshore.

Loews' topline in the last reported quarter declined 3% year over year due to lower insurance premiums and lower investment income.Total expenses increased 5.4% year over year on higher non-operating expenses.

Loews exited the third quarter with debt balance increasing 5.4% from the 2013 end level with debt equity ratio deteriorating 230 basis points.

These negatives prompted a downfall in the Zacks Consensus Estimate for 2014 and 2015 as all the estimates moved south over the last 60 days. It decreased 12% to $2.57 for 2014 and 7% to $3.19 for 2015.

Other Stocks to Consider

While presently we would like to avoid Loews, a better-ranked multiline insurer is CNO Financial Group, Inc. CNO sporting a Zacks Rank #1 (Strong Buy).

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LOEWS CORP L: Free Stock Analysis Report
 
CNO FINL GRP CNO: Free Stock Analysis Report
 
CNA FINL CORP CNA: Free Stock Analysis Report
 
DIAMOND OFFSHOR DO: Free Stock Analysis Report
 
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Zacks Investment Research