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Category: Stock Market and Loews Corporation
Date: 5 May 2020 Stock Price: $49.67 We take a look at the 1st quarter earnings report of their 2020 fiscal year of Loews, an investment company that holds a wide variety of publicly and privately traded companies.
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About Loews
Loews Corporation is one of the largest diversified companies in the United States, with businesses in the insurance, energy, hospitality and packaging industries. Our subsidiaries are: CNA Financial (NYSE: CNA), Diamond Offshore (NYSE: DO), Boardwalk Pipeline, Loews Hotels and Consolidated Container. Loews is focused on long-term value creation for its shareholders, and conservative financial management.
Loews’s multi-industry holding company structure is a key factor in our ability to create value, providing us with the freedom to make investments across a broad spectrum of industries, wherever we perceive the opportunity to enhance returns to our shareholders. Loews is traded on the New York Stock Exchange under the symbol L.
Loews’s multi-industry holding company structure is a key factor in our ability to create value, providing us with the freedom to make investments across a broad spectrum of industries, wherever we perceive the opportunity to enhance returns to our shareholders. Loews is traded on the New York Stock Exchange under the symbol L.
Overview of Loews' 1st quarter 2020 earnings report
Data below refers to the latest quarter unless specified otherwise:
Net income or loss per segment for the 1st quarter of 2020 (in $ millions):
- Revenues: $3.099 billion (down from $3.757 billion for the same period of the previous year)
- Revenues decreased by -17.5% over the last 12 months
- Net loss: -$632 million (down from a profit of $394 million from for the same period of the previous year)
- Diluted loss per share: -$2.20 (down from a profit of $1.27 for the same period of the previous year)
- Diluted weighted-average shares outstanding: 287.04 million (down from 310.36 million for the same period of the previous year)
- Book value per share (excluding accumulated other comprehensive income): $64.17 (down from $65.94 for the same quarter of the previous year)
Net income or loss per segment for the 1st quarter of 2020 (in $ millions):
- CNA Financial: (55)
- Diamond Offshore: (452)
- Boardwalk Pipelines: 65
- Loews Hotels & Co: (25)
- Corporate: Investment income (loss), net: (130)
- Other: (35)
Loews' management commentary on their 1st quarter 2020results
NEW YORK, May 4, 2020 /PRNewswire/ -- Loews Corporation (NYSE:L) today reported a net loss of $632 million, or $2.20 per share, for the three months ended March 31, 2020, compared to net income of $394 million, or $1.27 per share, in the first quarter of 2019.
The economic disruption caused by the COVID-19 pandemic and measures to mitigate the spread of the virus significantly affected Loews's results in the first quarter of 2020. The full impact of COVID-19 on Loews and our businesses will be dependent on the pandemic's duration and scope and the economic policy and other responses to the pandemic.
Book value per share decreased to $60.28 at March 31, 2020 from $65.71 at December 31, 2019, driven by the net loss reported for the first quarter of 2020 as well as a nearly $2 billion decrease in pretax unrealized investment gains at CNA as a result of disruptions in the fixed income market. Book value per share excluding accumulated other comprehensive income (AOCI) decreased to $64.17 at March 31, 2020 from $65.94 at December 31, 2019.
The economic disruption caused by the COVID-19 pandemic and measures to mitigate the spread of the virus significantly affected Loews's results in the first quarter of 2020. The full impact of COVID-19 on Loews and our businesses will be dependent on the pandemic's duration and scope and the economic policy and other responses to the pandemic.
Book value per share decreased to $60.28 at March 31, 2020 from $65.71 at December 31, 2019, driven by the net loss reported for the first quarter of 2020 as well as a nearly $2 billion decrease in pretax unrealized investment gains at CNA as a result of disruptions in the fixed income market. Book value per share excluding accumulated other comprehensive income (AOCI) decreased to $64.17 at March 31, 2020 from $65.94 at December 31, 2019.
CNA's results decreased primarily due to a decline in net investment income reflecting losses from limited partnership and common stock investments and a swing from net investment gains in the prior year period to net investment losses. These declines were precipitated by severe disruptions in the financial markets in March 2020 in response to the COVID-19 pandemic and related containment measures. Net investment losses included declines in the fair value of non-redeemable preferred stock and impairment losses on fixed maturity securities.
Boardwalk Pipelines' earnings decreased as revenues were lower due to expiring contracts that were replaced by contracts at lower average rates, partially offset by revenue from growth projects recently placed in service. Expenses rose largely because of higher maintenance project expenses, an increased asset base from recently completed growth projects and the expiration of property tax abatements.
Loews Hotels' results declined mainly due to the onslaught of the COVID-19 pandemic and mitigating measures, which dramatically reduced revenues beginning in early March 2020. By quarter end, Loews Hotels suspended operations temporarily at most of its hotel properties. During these suspension of operations, Loews Hotels has engaged in significant measures to adjust the operating cost structure of each hotel, deferred most capital expenses and reduced the operating costs of its management company.
Diamond Offshore's net loss increased primarily due to impairment charges totaling $774 million ($408 million after tax and noncontrolling interests) related to the carrying value of four drilling rigs. As previously disclosed, on April 26, 2020, Diamond Offshore and certain of its subsidiaries filed voluntary petitions for relief under Chapter 11 of the United States Bankruptcy Code. As a result of the filing, Loews has concluded that it will no longer control Diamond Offshore for accounting purposes and is required to deconsolidate Diamond Offshore as of the Chapter 11 filing date. Through the date of Diamond Offshore's filing, we will continue to include our share of Diamond Offshore's losses in our consolidated financial statements. In connection with the deconsolidation, we expect to record a significant non-cash loss in the second quarter of 2020 to recognize the difference between the carrying value and estimated fair value of our interest in Diamond Offshore. The carrying value of Diamond Offshore as of March 31, 2020 was $1.0 billion, net of tax.
The parent company investment portfolio recorded a loss for the quarter as compared to income in the prior year period. Results decreased primarily due to equity market declines in response to uncertainty about the effects of the COVID-19 pandemic.
Share repurchases
At March 31, 2020, there were 281.4 million shares of Loews common stock outstanding. For the three months ended March 31, 2020, the Company repurchased 9.7 million shares of its common stock at an aggregate cost of $445 million. Depending on market conditions, the Company may from time to time purchase shares of its and its subsidiaries' outstanding common stock in the open market or otherwise.
Boardwalk Pipelines' earnings decreased as revenues were lower due to expiring contracts that were replaced by contracts at lower average rates, partially offset by revenue from growth projects recently placed in service. Expenses rose largely because of higher maintenance project expenses, an increased asset base from recently completed growth projects and the expiration of property tax abatements.
Loews Hotels' results declined mainly due to the onslaught of the COVID-19 pandemic and mitigating measures, which dramatically reduced revenues beginning in early March 2020. By quarter end, Loews Hotels suspended operations temporarily at most of its hotel properties. During these suspension of operations, Loews Hotels has engaged in significant measures to adjust the operating cost structure of each hotel, deferred most capital expenses and reduced the operating costs of its management company.
Diamond Offshore's net loss increased primarily due to impairment charges totaling $774 million ($408 million after tax and noncontrolling interests) related to the carrying value of four drilling rigs. As previously disclosed, on April 26, 2020, Diamond Offshore and certain of its subsidiaries filed voluntary petitions for relief under Chapter 11 of the United States Bankruptcy Code. As a result of the filing, Loews has concluded that it will no longer control Diamond Offshore for accounting purposes and is required to deconsolidate Diamond Offshore as of the Chapter 11 filing date. Through the date of Diamond Offshore's filing, we will continue to include our share of Diamond Offshore's losses in our consolidated financial statements. In connection with the deconsolidation, we expect to record a significant non-cash loss in the second quarter of 2020 to recognize the difference between the carrying value and estimated fair value of our interest in Diamond Offshore. The carrying value of Diamond Offshore as of March 31, 2020 was $1.0 billion, net of tax.
The parent company investment portfolio recorded a loss for the quarter as compared to income in the prior year period. Results decreased primarily due to equity market declines in response to uncertainty about the effects of the COVID-19 pandemic.
Share repurchases
At March 31, 2020, there were 281.4 million shares of Loews common stock outstanding. For the three months ended March 31, 2020, the Company repurchased 9.7 million shares of its common stock at an aggregate cost of $445 million. Depending on market conditions, the Company may from time to time purchase shares of its and its subsidiaries' outstanding common stock in the open market or otherwise.
Loews Corporation (NYSE: L) stock price history
The image below, obtained from Google, shows the stock price history of Loews over the last 5 years. And its not been the best time for Loews stockholders. 5 years ago the stock was trading at around $41.40 a stock and its currently trading at $31.76 a stock. Thats a loss of - % suffered by Loews stockholders over the last 5 years.
The stock of Loews is trading at close to the mid point between its 52 week high and its 52 week low, which to us is a indication that the short term sentiment and momentum of Loews stock is neutral at this point in time, which could suggest the stock will trade mostly sideways in coming weeks and months as it awaits a new catalyst to drive the stock either higher or lower
The stock of Loews is trading at close to the mid point between its 52 week high and its 52 week low, which to us is a indication that the short term sentiment and momentum of Loews stock is neutral at this point in time, which could suggest the stock will trade mostly sideways in coming weeks and months as it awaits a new catalyst to drive the stock either higher or lower
Recent Google search trends for Loews stock price and L stock price
The graphic below shows the trend in Google searches for Loews stock price and L stock price over the last 12 months in the United States. From the above it is clear that L stock price gets far more searches than on Loews stock price.
Recent coverage of Loews
The extract below discusses the latest news regarding Loews as obtained from newswelcome.com (4 May 2020)
Loews Corporation (L) stock changed -8.77% to $31.62 on Friday. The stock registered daily trading volume of 1833441 shares vs to average volume size of 1.56M shares. L maintained activity of relative volume at 1.17.
Analysts see the Loews Corporation (L) stock as better bet to trade as they suggested $52 price target for the stock above to current $31.62 share price. Investors could set buy and sell price points around target prices to maximize returns. The ideal time to sell a stock is usually when it is trading higher than its target price range or during overheated markets. The ideal time to buy a stock is usually when it is trading at a substantial discount to its target price. This discount could be the result of weak market conditions or overreaction to recent company setbacks.
With above potential target price move of 64.45% comparing to current price, stock can be highly risky or profitable so need to be careful here. Analysts have set a Hold rating on this stock with 3 mean recommendation. However, few traders solely rely on analysts’ opinion to trade instead of careful review on stock. Analysts’ opinion on stock can be helpful to initiate simple analysis. Technical Indicators and Volatility: Loews Corporation stock is trading in normal condition area as its RSI value is 39.89. Where Relative Strength Index helps to understand the price condition of the stock. RSI value is based on last 14-days performance.
Read the full article here
Loews Corporation (L) stock changed -8.77% to $31.62 on Friday. The stock registered daily trading volume of 1833441 shares vs to average volume size of 1.56M shares. L maintained activity of relative volume at 1.17.
Analysts see the Loews Corporation (L) stock as better bet to trade as they suggested $52 price target for the stock above to current $31.62 share price. Investors could set buy and sell price points around target prices to maximize returns. The ideal time to sell a stock is usually when it is trading higher than its target price range or during overheated markets. The ideal time to buy a stock is usually when it is trading at a substantial discount to its target price. This discount could be the result of weak market conditions or overreaction to recent company setbacks.
With above potential target price move of 64.45% comparing to current price, stock can be highly risky or profitable so need to be careful here. Analysts have set a Hold rating on this stock with 3 mean recommendation. However, few traders solely rely on analysts’ opinion to trade instead of careful review on stock. Analysts’ opinion on stock can be helpful to initiate simple analysis. Technical Indicators and Volatility: Loews Corporation stock is trading in normal condition area as its RSI value is 39.89. Where Relative Strength Index helps to understand the price condition of the stock. RSI value is based on last 14-days performance.
Read the full article here
Loews (NYSE: L) latest stock valuation
So what is Loews stock worth based on the release of their latest earnings report? Since Loews is a holding and investment company our valuation is based on their book value per share of $64.17 instead of looking at their earnings or cash generated. And most investment and holding companies tend to trade at a discount of around 10% to their book value. We therefore have a target price or full value price for the stock of Loews at $57.80 a stock and therefore believe the stock of Loews is undervalued
We usually suggest that long term and fundamental investors get in at least 10% below our target (full value) price which in this case is $57.80. Therefore we believe a good entry point into Loews stock is at $52.20 or below. Since Loews is currently trading at below our suggested entry point into the stock we rate the stock of Loews as a buy
We usually suggest that long term and fundamental investors get in at least 10% below our target (full value) price which in this case is $57.80. Therefore we believe a good entry point into Loews stock is at $52.20 or below. Since Loews is currently trading at below our suggested entry point into the stock we rate the stock of Loews as a buy
Next earnings release date for Loews Corporation
It is expected that Loews 2nd quarter 2020 earnings report will be released in early August 2020