State Auto Financial Earnings: Here’s Why Investors are Buying Shares Now

State Auto Financial Corp. (NASDAQ:STFC) delivered a profit and beat Wall Street’s expectations, AND beat the revenue expectation. The revenue beat is a positive sign to shareholders seeking high growth out of the company. Shares are up 12.32%.

State Auto Financial Corp. Earnings Cheat Sheet

Results: Adjusted Earnings Per Share increased to $0.13 in the quarter versus EPS of $-0.18 in the year-earlier quarter.

Revenue: Decreased 0.56% to $285.1 million from the year-earlier quarter.

Actual vs. Wall St. Expectations: State Auto Financial Corp. reported adjusted EPS income of $0.13 per share. By that measure, the company beat the mean analyst estimate of $-0.07. It beat the average revenue estimate of $281.6 million.

Quoting Management: STFC President and CEO Bob Restrepo commented on the quarter as follows:
“State Auto Financial Corporation’s second quarter 2013 results continue to demonstrate substantially better fundamentals and profitability. Improving performance is the product of price increases in excess of loss costs, better geographic and line of business diversification, disciplined underwriting and high quality claim operations. Our year-to-date combined ratio of 101.9% was 8 points better than 2012, resulting from more normal catastrophe experience, improving non-catastrophe loss ratios, and stable expense ratios. We expect continued improvement as price increases earn out, loss costs remain stable, and RED runoff is completed.”

Key Stats (on next page)…

Revenue decreased 0.07% from $285.3 million in the previous quarter. EPS decreased 65.79% from $0.38 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 $0.16 to a profit $0.15. For the current year, the average estimate has moved up from a profit of $0.93 to a profit of $0.98 over the last ninety days.

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

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