Which of These Top 5 Insurance Stocks have the Strongest Earnings Trends?

Earnings trends are extremely important when evaluating stocks. At Wall St. Cheat Sheet, we view increasing earnings quarter-over-quarter as a simple way to gauge whether costs and the business model are stable. Then we like to analyze whether the company is outperforming peers in the sector. This is what we call the “E-Squared” investment analysis (‘E = Earnings Are Increasing Quarter-Over-Quarter’ + ‘E = Excellent Relative Performance Versus Peers and Sector’).

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Here’s your Cheat Sheet to how these top 5 insurance stocks rank via earnings trends:

Prudential Financial, Inc. (NYSE:PRU): Current Price $57.60

Fiscal Year 2008 2009 2010 2011 2012
Revenue ($) in millions 28,990 32,380 38,200 49,040 81,130
Diluted EPS ($) -2.53 7.63 5.75 7.22 0.9045

A nice set of results from Prudential, and excellent growth on the top line and EPS during 2011 and 2012.

Next, our CHEAT SHEET investing framework asks us to drill down to the recent quarterly data:

Quarter Dec. 31, 2011 Mar. 31, 2012 Jun. 30, 2012 Sep. 30, 2012 Dec. 31, 2012
Revenue ($) in millions 11,700 9,623 16,140 13,140 46,140
Diluted EPS ($) 1.36 -2.09 4.64 -1.41 -0.45

We’ll drop Prudential right away, seeing its negative EPS in the latest quarter, though revenue has made a quantum jump…

The Allstate (NYSE:ALL): Current Price $45.14

Fiscal Year 2008 2009 2010 2011 2012
Revenue ($) in millions 29,390 32,010 31,400 32,650 33,320
Diluted EPS ($) -3.06 1.58 1.71 1.51 4.68

Allstate grew EPS and revenue well during 2012. This is a nice improvement.

Next, our CHEAT SHEET investing framework asks us to drill down to the recent quarterly data:

Quarter Dec. 31, 2011 Mar. 31, 2012 Jun. 30, 2012 Sep. 30, 2012 Dec. 31, 2012
Revenue ($) in millions 8,236 8,362 8,278 8,128 8,547
Diluted EPS ($) 1.38 1.53 0.86 1.48 0.81

Unfortunately, the latest quarter is nothing to write home about. EPS has taken a steep dive south. Allstate is out of the race…

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Progressive Corp. (NYSE:PGR): Current Price $23.44

Fiscal Year 2008 2009 2010 2011 2012
Revenue ($) in millions 12,840 14,560 14,960 15,510 16,800
Diluted EPS ($) -0.10 1.57 1.61 1.59 1.48

Revenue has grown steadily over the last three years. Unfortunately, EPS is headed in the other direction…

Next, our CHEAT SHEET investing framework asks us to drill down to the recent quarterly data:

Quarter Dec. 31, 2011 Mar. 31, 2012 Jun. 30, 2012 Sep. 30, 2012 Dec. 31, 2012
Revenue ($) in millions 3,931 4,061 4,113 4,346 1,335
Diluted EPS ($) 0.42 0.42 0.19 0.46 0.16

Unfortunately, the quarterly result for December 2012 showed a dip due to Superstorm Sandy. We’ll move on from this stock…

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The Travelers Companies, Inc. (NYSE:TRV): Current Price $78.86

Fiscal Year 2008 2009 2010 2011 2012
Revenue ($) in millions 24,480 24,680 25,110 25,450 25,740
Diluted EPS ($) 0.00 6.33 6.62 3.36 6.30

Travelers has somewhat jumpy EPS numbers, though revenue is chugging along steadily upwards.

Next, our CHEAT SHEET investing framework asks us to drill down to the recent quarterly data:

Quarter Dec. 31, 2011 Mar. 31, 2012 Jun. 30, 2012 Sep. 30, 2012 Dec. 31, 2012
Revenue ($) in millions 6,373 6,392 6,359 6,512 6,477
Diluted EPS ($) 1.53 2.02 1.26 2.21 0.78

Unfortunately, the last quarter saw a huge dip in EPS as well as a fall in revenue. Not what we like to see…

MetLife, Inc. (NYSE:MET): Current Price $36.90

Fiscal Year 2007 2008 2009 2010 2011
Revenue ($) in millions 47,150 50,980 40,660 52,260 70,260
Diluted EPS ($) 5.48 4.14 -2.89 3.00 6.29

There’s evidence here of a serious turnaround after the mess in 2009 due to the financial crisis. Both revenue and EPS are off to the races in 2011.

Next, our CHEAT SHEET investing framework asks us to drill down to the recent quarterly data:

Quarter Sep. 30, 2011 Dec. 31, 2011 Mar. 31, 2012 Jun. 30, 2012 Sep. 30, 2012
Revenue ($) in millions 20,450 16,760 15,920 18,400 16,500
Diluted EPS ($) 3.21 1.42 -0.16 2.12 -0.92

But the September 2012 quarter was a washout as the company took a massive charge for derivative losses and goodwill impairment. We’ll pass on this stock too…

Conclusion

Unfortunately, none of the insurance stocks make the grade in this¬†¬†”E-Squared” investment analysis. We’ll check back as earnings season progresses.

“E = Earnings Are Increasing Quarter-Over-Quarter” is a core component of our successful CHEAT SHEET investing framework. Don’t waste another minute – click here to discover our CHEAT SHEET stock picks now!