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Category: Stock Market and Loews Corporation
Date: 28 October 2019 Stock Price: $49.67 We take a look at the 3rd quarter earnings report of their 2019 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' 3rd quarter 2019 earnings report
Data below refers to quarterly data unless specified otherwise:
Net income or loss per segment for the 3rd quarter of 2019 (in $ millions)
- Revenues: $3.675 billion (up from $3.608 billion for the same period of the previous year)
- Revenues increased by 1.85% over the last 12 months
- Net income: $72 million (down from $278 million from for the same period of the previous year)
- Diluted earnings per share: $0.24 (down from $0.88 for the same period of the previous year)
- Diluted weighted-average shares outstanding: 302.4 million (down from 316.8 million for the same period of the previous year)
- Cash and investments: $3.539 billion (up from $3.248 billion for the same quarter of the previous year)
- Book value per share (excluding accumulated other comprehensive income): $64.85 (up from $62.58 for the same quarter of the previous year)
- Dividend per share: $0.0625 (unchanged from $0.0625 per share for the same quarter of the previous year)
- Dividend yield: 0.5%
Net income or loss per segment for the 3rd quarter of 2019 (in $ millions)
- CNA: 96
- Diamond: -48
- Boardwalk: 29
- Hotels:3
- Corporate:-8
- Total: 72
Loews' management commentary on their 3rd quarter 2019 results
NEW YORK, Oct. 28, 2019 /PRNewswire/ -- Loews Corporation (NYSE: L) today reported net income of $72 million, or $0.24 per share, for the three months ended September 30, 2019, compared to $278 million, or $0.88 per share, in the comparable prior year period. Net income for the nine months ended September 30, 2019 was $715 million, or $2.34 per share, compared to $801 million, or $2.49 per share, in the comparable prior year period.
Book value per share increased to $64.90 at September 30, 2019 from $59.34 at December 31, 2018. Book value per share excluding accumulated other comprehensive income (AOCI) increased to $64.85 at September 30, 2019 from $62.16 at December 31, 2018.
CNA's earnings decreased primarily due to a charge of $216 million ($151 million after tax and noncontrolling interests) resulting from the recognition of an active life reserve premium deficiency in long term care. Absent this charge, earnings decreased mainly due to unfavorable net prior year development in the Property & Casualty business as compared to favorable net prior year development in 2018, partially offset by lower catastrophe losses in 2019.
Diamond Offshore's results declined due to continuing challenging market conditions. Diamond Offshore experienced lower contract drilling revenues and higher contract drilling expense, partially offset by the absence of a legal settlement charge in 2018.
Boardwalk Pipelines' earnings increased slightly as higher firm transportation revenues from growth projects recently placed into service mostly offset the negative revenue impact of contract restructurings and expirations.
Loews Hotels & Co's earnings decreased due to lower earnings from its properties in Florida as the threat of Hurricane Dorian negatively impacted results. Pre-opening and other non-recurring expenses related to properties under development also contributed to the decline.
Income generated by the parent company investment portfolio increased primarily due to higher returns on equity securities and short-term investments.
Share repurchases
At September 30, 2019, there were 299.2 million shares of Loews common stock outstanding. For the three and nine months ended September 30, 2019, the Company repurchased 3.4 million and 13.2 million shares of its common stock at an aggregate cost of $168 million and $642 million. From October 1, 2019 to October 25, 2019, the Company repurchased an additional 1.8 million shares of its common stock at an aggregate cost of $90 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.
Book value per share increased to $64.90 at September 30, 2019 from $59.34 at December 31, 2018. Book value per share excluding accumulated other comprehensive income (AOCI) increased to $64.85 at September 30, 2019 from $62.16 at December 31, 2018.
CNA's earnings decreased primarily due to a charge of $216 million ($151 million after tax and noncontrolling interests) resulting from the recognition of an active life reserve premium deficiency in long term care. Absent this charge, earnings decreased mainly due to unfavorable net prior year development in the Property & Casualty business as compared to favorable net prior year development in 2018, partially offset by lower catastrophe losses in 2019.
Diamond Offshore's results declined due to continuing challenging market conditions. Diamond Offshore experienced lower contract drilling revenues and higher contract drilling expense, partially offset by the absence of a legal settlement charge in 2018.
Boardwalk Pipelines' earnings increased slightly as higher firm transportation revenues from growth projects recently placed into service mostly offset the negative revenue impact of contract restructurings and expirations.
Loews Hotels & Co's earnings decreased due to lower earnings from its properties in Florida as the threat of Hurricane Dorian negatively impacted results. Pre-opening and other non-recurring expenses related to properties under development also contributed to the decline.
Income generated by the parent company investment portfolio increased primarily due to higher returns on equity securities and short-term investments.
Share repurchases
At September 30, 2019, there were 299.2 million shares of Loews common stock outstanding. For the three and nine months ended September 30, 2019, the Company repurchased 3.4 million and 13.2 million shares of its common stock at an aggregate cost of $168 million and $642 million. From October 1, 2019 to October 25, 2019, the Company repurchased an additional 1.8 million shares of its common stock at an aggregate cost of $90 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 $43.60 a stock and its currently trading at $49.67 a stock. That's a decent return of 13.9% provided to Loews stockholders over the last 5 years. The opportunity cost of holding Loews stock instead of say Netflix that returned over 300% over a 5 year period becomes significant.
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 coverage of Loews
The extract below discusses the latest news regarding Loews as obtained from Zacks.com
Loews Corporation (L - Free Report) reported third-quarter 2019 earnings of 74 cents per share, which missed the Zacks Consensus Estimate by 1.3% and decreased 15.9% year over year. The decline was largely attributable to soft results at CNA Financial (CNA - Free Report) and Diamond Offshore (DO - Free Report) , partially offset by higher parent company net investment income.
Behind the Headlines
Operating revenues of $3.7 billion increased 1.9% year over year. Higher insurance premiums and operating revenues and other aided the top line. Total expenses increased 11.1% year over year to $3.6 billion on higher insurance claims and policyholders' benefits as well as higher operating expenses. Book value excluding accumulated other comprehensive income as of Sep 30, 2019 was $64.85 per share, up 4.3% from $62.16 as of Dec 31, 2018.
Read the full article here
Loews Corporation (L - Free Report) reported third-quarter 2019 earnings of 74 cents per share, which missed the Zacks Consensus Estimate by 1.3% and decreased 15.9% year over year. The decline was largely attributable to soft results at CNA Financial (CNA - Free Report) and Diamond Offshore (DO - Free Report) , partially offset by higher parent company net investment income.
Behind the Headlines
Operating revenues of $3.7 billion increased 1.9% year over year. Higher insurance premiums and operating revenues and other aided the top line. Total expenses increased 11.1% year over year to $3.6 billion on higher insurance claims and policyholders' benefits as well as higher operating expenses. Book value excluding accumulated other comprehensive income as of Sep 30, 2019 was $64.85 per share, up 4.3% from $62.16 as of Dec 31, 2018.
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 $64.85 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 $58.40 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 $58.40. Therefore we believe a good entry point into Loews stock is at $52.60 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 $58.40. Therefore we believe a good entry point into Loews stock is at $52.60 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 4th quarter and full year results of their 2019 fiscal year will be released in late January 2020 to early February 2020