Investors in CNA Financial Corporation (NYSE:CNA) had a good week, as its shares rose 3.0% to close at US$49.16 following the release of its second-quarter results. It looks like the results were a bit of a negative overall. While revenues of US$3.5b were in line with analyst predictions, statutory earnings were less than expected, missing estimates by 4.1% to hit US$1.17 per share. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.
Taking into account the latest results, the most recent consensus for CNA Financial from two analysts is for revenues of US$14.2b in 2024. If met, it would imply a credible 2.8% increase on its revenue over the past 12 months. Statutory per-share earnings are expected to be US$4.74, roughly flat on the last 12 months. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$14.3b and earnings per share (EPS) of US$4.91 in 2024. So it looks like there's been a small decline in overall sentiment after the recent results - there's been no major change to revenue estimates, but the analysts did make a small dip in their earnings per share forecasts.
The consensus price target held steady at US$46.50, with the analysts seemingly voting that their lower forecast earnings are not expected to lead to a lower stock price in the foreseeable future.
Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. The period to the end of 2024 brings more of the same, according to the analysts, with revenue forecast to display 5.7% growth on an annualised basis. That is in line with its 5.6% annual growth over the past five years. Compare this with the broader industry, which analyst estimates (in aggregate) suggest will see revenues grow 5.1% annually. It's clear that while CNA Financial's revenue growth is expected to continue on its current trajectory, it's only expected to grow in line with the industry itself.
The Bottom Line
The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for CNA Financial. They also reconfirmed their revenue estimates, with the company predicted to grow at about the same rate as the wider industry. The consensus price target held steady at US$46.50, with the latest estimates not enough to have an impact on their price targets.
Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. At least one analyst has provided forecasts out to 2025, which can be seen for free on our platform here.
You should always think about risks though. Case in point, we've spotted 2 warning signs for CNA Financial you should be aware of.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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