Monthly Archives: July 2021

Ally Financial Action (NYSE: ALLY) has fallen nearly 1% in the past five trading days and is currently trading at almost $ 51 per share. Allied financial

ALLY
, one of the largest auto finance companies in the United States, has seen its shares rise 44% since the start of the year, and a whopping 323% since lows in March of last year. This meteoric rise was fueled by a shortage of new cars on the market due to semiconductor supply constraints, leading to higher prices for new and used cars. The crisis has benefited the company’s revenues due to higher outstanding loans. The same is true of the 37% year-over-year growth in its sales in the first quarter.

But will ALLY stock continue on its bullish path over the next few weeks, or is the stock more likely to fall? According to the Trefis Machine Learning Engine, which identifies trends in a company’s stock price data over the past ten years, ALLY stock returns average close to 1.7% then one month (21 trading days) period after experiencing a 1% increase in the last week (five trading days). Additionally, there is a 57% chance that the stock will give positive returns in the next month or so.

But how would those numbers change if you want to hold ALLY shares for a longer or shorter period? You can test the answer and many other combinations on the Trefis Machine Learning to test the chances of Ally Financial shares rising after a drop and vice versa. You can test the chances of recovery over different time intervals of a quarter, a month, or even a single day!

MACHINE LEARNING MOTOR – try it yourself:

IF The ALLY share has moved by -5% over five trading days, SO Over the next 21 trading days, the ALLY share moves an average of 2.6% with a 71.5% probability of positive returns.

Some fun scenarios, FAQs and explanation of Ally Financial stock movements:

Question 1: Is the average return on Ally Financial Inc stock higher after a decline?

Reply: Consider two situations,

Case 1: Ally Financial Inc’s stock drops -5% or more in a week

Case 2: Ally Financial Inc’s share increases by 5% or more in a week

Is the average return on the Ally Financial Inc share higher in the next month after Case 1 or Case 2?

ALLIED action fares better after case 1, with an average return of 2.6% during the following month (21 trading days) in case 1 (where the stock has just suffered a loss of 5% during the previous week), against an average return 2.5% for case 2.

In comparison, the S&P 500 has an average return of 3.1% over the next 21 trading days in case 1, and an average return of only 0.5% for case 2, as detailed in our dashboard. which details the average return of the S&P 500 after a fall or rise.

Try the Trefis machine learning engine above to see for yourself how Ally Financial Inc stocks are likely to perform after a specific gain or loss over a period of time.

Question 2: Does patience pay?

Reply: If you buy and hold shares of Ally Financial Inc, it is expected that over time short-term fluctuations will cancel each other out and the long-term positive trend will be in your favor – at least if the company is otherwise solid.

Overall, according to data and calculations from the machine learning engine Trefis, patience absolutely pays for most actions!

For the ALLY share, the returns over the following N days after a variation of -5% over the last 5 trading days are detailed in the table below, as well as the returns of the S & P500:

Question 3: What about the average return after a rise if you wait a while?

Reply: The average return after a rise is naturally lower than that after a fall, as detailed in the previous question. Interestingly, however, if a stock has won in the last few days, you’d better avoid short-term bets for most stocks.

It is powerful enough to test the trend for yourself for Ally Financial Inc stock by changing the entries in the charts above.

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See everything Featured analyzes from Trefis and To download Trefis data here

Hartford Financial (NYSE: HIG) is expected to release its results for the second quarter of fiscal 2021 on Thursday, July 29. We expect Hartford Financial

RAISED
to report mixed results, with revenues exceeding consensus estimates and profits missing the mark. The insurance giant missed revenue and profit expectations in the last quarter, despite growing 7% year-over-year in revenue. Growth was mainly driven by an improvement in its net investment income. However, its net premium and fee income declined slightly during the quarter. In addition, the company’s profitability figures suffered in the first quarter due to higher operating expenses. We expect some improvement in profitability in the second quarter, however, revenues should follow the same trend.

Our forecast indicates that Hartford Financial Assessment is around $ 75 per share, or 22% above the current market price of around $ 62. Check out our interactive dashboard analysis at Hartford Financial pre-earnings: what to expect in the second quarter? for more details.

(1) Revenue expected just ahead of consensus estimates in Q2

Trefis estimates Hartford Financial’s second-quarter 2021 revenue to be around $ 5.25 billion, slightly above the consensus estimate of $ 5.21 billion. Hartford Financial’s revenue of $ 20.5 billion for full year 2020 was slightly lower than the 2019 figure. This could be attributed to two main reasons: First, weak premium growth (2% year-on-year). annual); second, a 5% year-over-year decline in net investment income in 2020 due to headwinds in interest rates. That said, net investment income saw some recovery in the first quarter, although premiums and commission income declined slightly compared to the same period last year. We expect the same trend to continue in the second quarter of fiscal 2021.

Going forward, we expect the return on investment to remain below pre-Covid-19 levels for some time to come. But growth in invested assets, coupled with some improvement in investment returns, is likely to push net investment income up. Additionally, bonuses and commissions are likely to improve as the economy recovers, although it is unlikely to generate significant growth during the year. Overall, HIG revenue is expected to remain around $ 21 billion in fiscal 2021. Our dashboard on Hartford Financial revenues offers more details on the business segments.

2) BPA risks missing consensus estimates

Hartford Financial’s adjusted earnings per share for the second quarter of 2021 is expected to be $ 1.20 per Trefis analysis, nearly 10% below the consensus estimate of $ 1.33. The company’s net income fell 17% year-on-year to $ 1.7 billion in 2020, mainly due to increased benefits, losses and claims settlement expenses. In addition, the same trend also continued in the first quarter of 2021, with net profit down 9% year-on-year. That said, we expect operating expenses to decline favorably in the second quarter.

The company’s net profit margin is expected to decline slightly in 2021. This will likely translate to EPS of $ 4.77, just below the 2020 figure.

(3) Stock price estimate 22% higher than the current market price

Through our Hartford Financial Assessment, with an EPS estimate of around $ 4.77 and a P / E multiple just below 16x in fiscal 2021, that translates to a price of $ 75, or 22% above the price. current market of about $ 62.

Note: P / E multiples are based on the stock price at the end of the year and reported (or expected) adjusted earnings for the entire year

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Long-term care and mortgage insurer Genworth Financial (NYSE: GNW) the stock trended strongly downward along with the rest of its peers in the mortgage insurance sector. The US commercial mortgage insurance division named Enact was originally slated for an IPO in the $ 22 to $ 24 price range, but was suspended due to market conditions. That pushed stocks down in May, but quickly recovered over $ 4. It has been falling steadily for several weeks despite benchmarks reaching new highs. This reflects the lack of breadth of the US stock markets which rate the market’s performance on the S&P 500 and Nasdaq 100 indexes, which is very misleading. That’s for another article. Fundamentals remain strong for Genworth and any update on the timing of Enact’s IPO should immediately push up stock prices. The housing market remains strong and consumers still have pent-up or even stronger demand as material costs normalize. The US Federal Reserve still does not anticipate an interest rate hike until 2023, but inflation is also another reality that could cause the Fed to react sooner than expected. Management may have been premature in delaying the IPO, but the follow-up is still a reality. Cautious investors can watch for opportunistic pullbacks to gain exposure before the split.

Publication of first quarter 2021 results

On April 29, 2021, Genworth released first quarter 2021 results for the quarter ending March 2021. The company reported earnings per share (EPS) of $ 0.33 excluding non-recurring items, beating analysts’ estimates. consensus of $ 0.23, $ 0.10. Revenue fell (-0.02%) year-over-year (year-on-year) to $ 1.99 billion, beating analysts’ estimates at $ 1.96 billion. The Company completed the sale of its Genworth Mortgage Insurance Australia Limited for net proceeds of $ 123 million. USMI had adjusted operating income of $ 126, up 33%. New defaults continue to decline, down 16%. Genworth CEO Tom McInerney said: “We have remained nimble and have taken decisive action to ensure that Genworth is well positioned to create value for our stakeholders going forward. Given the current cash position of our holding company, the steps we have already taken with our strategic plan, our capital raising efforts and our expected cash flow profile, I am confident in Genworth’s ability to deliver on its debts over the next few years. We have the right strategy in place and the right team to lead our execution of that strategy, as well as the guidance of our new independent directors Jill R. Goodman, Howard D. Mills, III and Ramsey D. Smith, who we are delighted to have. ” welcome to our board of directors.

Take-out conference call

CEO McIerney set the tone for the Long Term Care (LTC) business: “We take a three-pronged approach to maximize the value of our LTC business and to monetize our deep expertise in this area. First and foremost, we continue to mitigate our drawbacks through our multi-year LTC pricing action plan and reduce benefit options. Both of these will continue to reduce our risk. We have made exceptional progress in this effort through the end of the first quarter, reaching over $ 15 billion in net present value through LTC premium increases and benefit reductions, since 2012. Second, we are also exploring partnership opportunities with reputable third parties. to launch a new long-term care insurance business in the United States. He continued, “There is a huge need for long-term care solutions in the United States, with 54 million Americans aged 65 and over as of the end of 2019. And that number is expected to grow to 95 million by 2060. . There is few of it. players in the long-term care insurance market today due to serious financial problems arising from the existing long-term care insurance activities. We are evaluating opportunities to monetize our LTC expertise and intellectual property in partnership with strong third parties to develop a number of new LTC products and services. He didn’t talk much about USMI IPO.

Delayed IPO

On May 12, 2021, Genworth announced that it was delaying the USMI’s IPO due to market volatility. The Company will continue to monitor market conditions before pricing Enact’s IPO. The proposed IPO would result in the spin-off of 22.6 million shares and would continue to own 83.7% of the company. Enact sells private mortgage insurance to homeowners when they buy a home with less than 20% down.

GNW Opportunistic Withdrawal Levels

Using the gun charts on weekly and daily time intervals provides an accurate view of the landscape for the GNW stock. The weekly guns chart is in a strong downtrend with 5-period moving average (MA) resistance down near $ 3.77 Fibonacci level (fib). The weekly formed a high market structure (MSH) sell trigger on the blackout below $ 4.16. The Weekly Stochastic has a bearish mini reverse puppy targeting the lower Bollinger Bands (BB) near the $ 2.89 fib. Weekly weak market structure (MSL) buy triggered on the breakout above $ 3.25 which will be a key level for the bulls to defend. The daily guns chart has an extended downtrend with a 5 period MA down to $ 3.53 and lower BBs overlapping the weekly MSL trigger of $ 3.25. Cautious investors can watch for opportunistic withdrawal levels at $ 3.33 fib, $ 3.25 weekly MSL trigger, $ 3.15 fib, $ 2.89 fib, $ 2.74 fib, $ 2.56 fib, and $ 2.47 fib . The upward trajectories range from the $ 4.40 level to the $ 6.34 fib level. Keep an eye out for peer mortgage insurers MTG, NMIH, ESNT, and RDN as they tend to grow together.

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Discover Financial (NYSE: DFS) is expected to release its results for the second quarter of fiscal 2021 on Thursday, July 22. We expect Discover Financial to miss consensus estimates for both revenue and profit. While the credit card giant managed to beat consensus estimates last quarter, its revenue declined year over year. This decrease is explained by the decrease in net interest income, followed by some decrease in non-interest income. On the other hand, the company posted strong growth in profitability, thanks to lower provisions for credit losses. We expect the NII to continue to suffer in the second quarter, however, non-interest income should benefit from some recovery in consumer spending levels. In addition, provisions are also expected to decline favorably in the second quarter.

Our forecast indicates that Discover the valuation of Financial is about $ 108 per share, which is 7% less than the current market price of about $ 117. Check out our interactive dashboard analysis at Check out Financial’s pre-earnings: what to expect in Q2? for more details.

(1) Revenue is expected to narrowly miss consensus estimates in Q2

Trefis estimates Discover Financial’s revenue in the second quarter of 2021 at around $ 2.83 billion, slightly lower than the consensus estimate of $ 2.90 billion. The company’s revenue of $ 11.1 billion in 2020 was 3% lower than in 2019, due to a slight decline in the direct banking segment which generates nearly 95% of total revenue. The segment suffered from lower consumer spending and headwinds in interest rates. Additionally, the same trend continued in the first quarter of 2021. That said, we expect levels of consumer spending to improve in the second quarter, benefiting outstanding loan balances and transaction volumes. However, NII will likely suffer in the second trimester as well.

While interest rates are unlikely to immediately return to pre-Covid-19 levels, improving levels of consumer spending will likely drive DFS revenue in 2021. The company is expected to touch 11 , $ 4 billion during the year. Our dashboard on Discover Financial’s income offers more details on the business segments.

2) BPA risks missing consensus estimates

Discover Financial’s adjusted earnings per share in the second quarter of 2021 is expected to be $ 3.45 per Trefis analysis, almost 9% below the consensus estimate of $ 3.75. The company increased its provisions for credit losses in 2020 from $ 3.2 billion to $ 5.1 billion, to address the higher risk of default. It weighed on its adjusted net income, reducing it by 62% year-on-year. That said, DFS has reduced its provisions in recent quarters. Notably, the allowance for credit losses declined to – $ 365 million in the first quarter, from $ 1.8 billion a year ago, improving EPS from – $ 0.25 to $ 5.04. We expect the same trend to continue in the second quarter of fiscal 2021 results.

Going forward, we expect the company’s net profit margin to improve in the current year, due to a favorable decline in provisions. This will lead to EPS of $ 9.51 in fiscal 2021.

(3) Estimate of the share price 7% lower than the current market price

Through our Discover the valuation of Financial, with an EPS estimate of around $ 9.51 and a P / E multiple of just over 11x in fiscal 2021, that translates to a price of $ 108, which is 7% lower than the current market price of about $ 117.

Note: P / E multiples are based on the stock price at the end of the year and reported (or expected) adjusted earnings for the entire year

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It has been a roller coaster for the banking industry in recent years. Under the Trump administration, you had a huge corporate tax cut and several interest rate hikes. This seemed to bode well for banks in general, and Bank of America (NYSE:BAC) stock in particular.

However, the good times ended pretty quickly. The Fed halted its interest rate cycle in 2019, and the economy started to falter a bit. Then Covid-19 hit and the bottom dropped for finances. Suddenly, bankers were no longer thinking of increasing dividends or growing loans, but rather closing the hatches for a 2008 retread.

Fortunately, this did not happen. The government responded quickly with huge stimulus packages that helped keep consumers and small businesses afloat. Meanwhile, banks entered the Covid-19 crisis in much better shape than in 2008. This time around, there was no real estate bubble. On top of that, banks had to hold a lot more capital on their balance sheets thanks to regulatory changes made as a result of the previous crisis.

Recover quickly from Covid-19

As such, banks entered 2020 with a ton of reserves ready to weather any storm, and they hadn’t aggressively loaned against houses of dubious value. Add it all up and by the start of this year it was clear that the banks would not suffer many significant credit losses as a result. Of course, a few banks here and there have taken a dip in bad loans to more speculative businesses such as restaurants, malls or construction loans. Overall, however, the banks have come through the bust.

BAC stock, along with most other too-big-to-fail peers, has recouped its stock price losses from the Covid-19 panic. However, investors are underestimating the recovery. Not only have the banks gotten rid of the problems of the last year, they’re actually in much better shape than they were before Covid. Here’s why.

Better prospects in this accelerating economy

The first key change is that banks now benefit from a much more favorable interest rate environment. The Federal Reserve has yet to officially tighten interest rates. However, they hinted that they were starting to think about a move. Already, the market is anticipating a significant shift in yields on US Treasuries. These, in turn, tend to set the rates that banks can charge on mortgages. As these pop up, Bank of America may earn more from its loan program.

Second, there is a wave of inflation. Inflation can be good or bad for banks, depending on what form it takes. However, this appears to be “good” inflation for the sector. Consumers are rushing to buy homes, cars, appliances, vacations, and other big-ticket items. They move so quickly, in fact, that it causes shortages of many key inputs. We have seen shortages in areas ranging from lumber and copper to semiconductor chips as companies struggle to keep track of all purchases.

How it filters into the profits of BAC stocks

This is great for banks with consumer credit because a lot of that spending ends up being with borrowed funds. In addition, companies are rushing to increase production, which in turn requires investments in capital goods, as well as higher wages for employees. These investments and wage increases in turn end up financing more consumption and GDP growth, which in turn stimulates the bank’s activity. It is a classic virtuous circle.

As if that weren’t enough, Bank of America isn’t just a retail business. It has a large investment bank that engages in capital market activities such as underwriting initial public offerings (IPOs) and bond issues, as well as advising companies pursuing mergers and acquisitions ( MY). As you can guess, with the rise of the stock market, it generates all kinds of demands for expertise in the stock and bond markets from the big investment banks such as Bank of America.

Verdict Stock BAC

There is no need to make it too complicated. Bank of America and the banking industry are in full swing. The housing market is exploding, which is great for banks on several fronts. Interest rates are trending up, despite this week’s drop, in a favorable way for the banking sector. And regulatory concerns are fading; The Federal Reserve is easing restrictions again now that it is clear that the banking industry has gone through Covid-19 without incurring major losses.

All of this should pave the way for LAC’s stock to continue plowing much higher. The only real question is which big bank to own. My top pick in the industry is Goldman Sachs (NYSE:SG), because its handling is incredibly good at handling a tight ship. But whether or not you own Goldman, JP Morgan (NYSE:JPM), Bank of America, or some other such rival, there’s a good chance its stock price will go up a lot over the next 12 months.

Many traders see that bank stocks have risen a lot and look to profit taking. This is a perfectly understandable short-term reaction. Further down, however, it seems clear that the banking rally is still in its infancy. Investors who sell BAC shares here risk missing out at least another year of sizzling profits for the company in the future.

As of the publication date, Ian Bezek was long in GS stock. The opinions expressed in this article are those of the author, subject to the publication guidelines of InvestorPlace.com.

Ian Bezek has written over 1,000 articles for InvestorPlace.com and Seeking Alpha. He also worked as a junior analyst for Kerrisdale Capital, a $ 300 million New York-based hedge fund. You can reach him on Twitter at @irbezek.

What happened

Financial services and life insurance company shares Prudential financial (NYSE: PRU) grew 31.3% in the first half, according to data provided by S&P Global Market Intelligence.

Prudential Financial saw its profitability improve after the impacts of the pandemic hurt it last year. The company has taken initiatives to transform its business line while saving $ 750 million in costs by 2023, including $ 400 million this year.

So what

Last year, Prudential was hit hard by the pandemic and as a result recorded a net loss of $ 146 million. This came after a profit of $ 4.1 billion in 2019.

The financial services company was hit by investment losses totaling $ 3.8 billion as well as a 9% drop in premium income from the previous year. Together, that brought total revenue down 12% to $ 57 billion.

But investors are optimistic about signs of a turnaround. In the first quarter, revenue of nearly $ 17 billion was a 26% improvement over the previous year, and net profit was $ 2.8 billion in the quarter after posting a loss of $ 270 million the previous year.

Prudential has worked to change its business portfolio and earnings profile, seeking to shift to less market and rate sensitive products. One of these products is FlexGuard, an indexed variable annuity that offers clients different levels of protection and the ability to increase their retirement income. FlexGuard sales reached $ 1.6 billion in the first quarter, up from $ 1.2 billion in the fourth quarter, and represented 84% of its annuity sales.

With this backbone, along with his cost-cutting measures, CEO Charlie Lowrey said, “We expect Prudential Financial to become a higher growth, less market sensitive and more agile company. ”

Now what

Prudential Financial is a strong company that is on the right track to recover, and its stocks still appear to be downgraded. It trades at a relatively low price with a P / E of 15.1 and a futures P / E of 7.6 which makes it look even cheaper. Not only that, but it’s also a great income stock with a 4.55% dividend yield.

Management’s strategic change in its business mix and cost savings helped the stock recover in the first half of the year and are positive signs for shareholders.

Financial sector exchange-traded funds were higher on Thursday as the corporate earnings season helped boost bank stocks.

Thursday the Invesco KBW Regional Bank Portfolio (NYSEArca: KBWR) increased by 0.2% while the ETF SPDR S&P Bank (NYSEArca: KBE) increased by 0.4%. Meanwhile, the wider SPDR Financial Sector (NYSEArca: XLF) was flat.

“The markets were priced perfectly, and now that we have the uncertainty about the Fed’s backing on policy, it’s causing this pause,” said Derek Halpenny, research manager for global markets in the European region. at MUFG Bank. the Wall Street newspaper. “The feeling of positive risk has definitely faded.”

Among the leaders, US Bancorp (USB) shares rose 2.8% after the company reported second-quarter earnings per share of $ 1.28, 14 cents above estimates, with revenue exceeding also expectations. The regional bank benefited from the improving economy, which helped bolster credit and debit card revenues and enabled it to reduce its allowance for credit losses, CNBC Reports.

American International Group (AIG) shares rose 2.8% after announcing an agreement to sell a 9.9% stake in its life insurance and retirement services unit to Blackstone (BX) for $ 2.2 billion. Blackstone also agreed to a long-term contract to manage initial assets of $ 50 billion, with the amount rising to nearly $ 100 billion over the next six years, the the Wall Street newspaper reports. The AIG unit has around $ 200 billion in assets.

Shares of Truist Financial (TFC) rose 2.0% after reporting adjusted quarterly earnings of $ 1.55 per share, compared to the consensus estimate of $ 1.19. Revenues exceeded Wall Street forecasts. The bank recorded strong commission and wealth management income, among other factors, in the second quarter.

Meanwhile, shares of Morgan Stanley (MS) were down after announcing they exceeded estimates by 20 cents with second quarter earnings of $ 1.85 per share. Turnover also exceeded forecasts, thanks to an acceleration in investment banking activity.

For more information on the finance industry, visit our finance category.

What happened

Actions of the damage insurer Cincinnati Financial (NASDAQ: CINF) grew 33.5% in the first six months of the year according to data provided by S&P Global Market Intelligence. Cincinnati Financial posted strong premium growth at the start of the year. Not only that, but an economic recovery and concerns about inflation could benefit the interest rate sensitive insurance industry.

So what

During Cincinnati Financial’s first quarter earnings period, the company saw premiums increase 6% year-over-year to $ 1.5 billion. This growing premium growth is in line with an already strong trend for the insurer. Over the past five years, Cincinnati Financial has seen its premiums increase at a compound annual growth rate (CAGR) of 6.1%, above the industry average.

In addition, insurers have increased premiums charged to customers due to a “tough” insurance environment. A tough insurance market occurs when claims are larger than expected, reducing the profitability of insurance companies. In recent years, insurers have seen their payments increase due to natural disasters and other catastrophes, which has prompted them to increase their rates.

Cincinnati Financial also saw its profitability improve, posting a combined ratio of 91.2% in the first quarter, an improvement over its combined ratio of 98.5% in the same quarter last year. A combined ratio of less than 100% means that insurers are writing profitable policies.

A recovering economy – signaled by rising GDP and rising employment levels – is another positive sign for the insurance industry. The increase in the economic activity of businesses and individuals increases the demand for insurance. The current inflationary environment could also be good for insurers. Insurance companies rely in part on investment income to generate additional income. In an inflationary environment and an expanding economy, interest rates are likely to rise, thereby increasing the insurer’s investment income.

Cincinnati Financial saw notable improvement in the first quarter, with investment income increasing 5.5% year over year and investment gains of $ 504 million, a significant change from its investment loss from $ 1.7 billion in the first quarter of last year.

Now what

Cincinnati Financial is a strong company with good profitability and has had some positive winds that have worked in its favor this year. Not only that, but the company has earned the title of Dividend King – a name given to S&P 500 companies that have increased their dividend for at least 50 years in a row, one of 27 stocks that can claim the title.

The company has increased its dividend for 61 consecutive years, and its annual return of 2.12% is generally higher than that of other property and casualty insurers. Progressive, Allstate, and Chubb over the years, making the company an exceptional dividend-paying stock that should continue to perform well in the years to come.