American Financial Group Earnings: Here’s Why Investors are Ambivalent Now

American Financial Group Inc. (NYSE:AFG) delivered a profit and beat Wall Street’s expectations, BUT came up short on beating the revenue expectation. The revenue miss is a negative sign to shareholders seeking high growth out of the company.

American Financial Group Inc. Earnings Cheat Sheet

Results: Adjusted Earnings Per Share increased 5.49% to $0.96 in the quarter versus EPS of $0.91 in the year-earlier quarter.

Revenue: Decreased 38.35% to $709 million from the year-earlier quarter.

Actual vs. Wall St. Expectations: American Financial Group Inc. reported adjusted EPS income of $0.96 per share. By that measure, the company beat the mean analyst estimate of $0.83. It missed the average revenue estimate of $753.91 million.

Quoting Management: Carl H. Lindner III and S. Craig Lindner, AFG’s Co-Chief Executive Officers, issued this statement: “We are especially pleased with the strong earnings in our annuity segment for the second quarter and first six months of 2013. Although underwriting profitability in our P&C businesses was lower year over year, we remain encouraged by the market firming we are seeing in selected P&C markets, which has resulted in growth opportunities for most of our P&C businesses. Our proven investment skills and mix of specialty insurance businesses have positioned us well in the current interest rate environment and amid widespread catastrophe losses in the industry.

Key Stats (on next page)…

Revenue decreased 38.24% from $1.15 billion in the previous quarter. EPS increased 4.35% from $0.92 in the previous quarter.

Looking Forward: Analysts have a more negative outlook for the company’s next-quarter performance. Over the past three months, the average estimate for next quarter’s earnings has fallen from a profit of $1.06 to a profit $1.02. For the current year, the average estimate has moved up from a profit of $3.91 to a profit of $3.93 over the last ninety days.

Stocks with improving earnings metrics are worthy of your extra attention. In fact, “E = Earnings Are Increasing Quarter-Over-Quarter” is a core component of our CHEAT SHEET investing framework for this very reason. Don’t waste another minute – click here and get our CHEAT SHEET stock picks now.

(Company fundamentals provided by Xignite Financials. Email any earnings discrepancies to earnings [at] wallstcheatsheet.com)