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With a market cap of $53.9 billion, Northbrook, Illinois-based The Allstate Corporation (ALL) is the third-largest property-casualty insurer and the largest publicly-held personal lines carrier in the U.S. It offers a wide range of insurance and investment products to households in the U.S. and Canada through various channels, including exclusive agencies and online platforms.
The insurer's shares have outperformed the broader market over the past 52 weeks. ALL has surged 49.9% over this time frame, while the broader S&P 500 Index ($SPX) has rallied 31%. In 2024, ALL shares are up 45.7%, compared to SPX’s 25.2% gain on a YTD basis.
Focusing more closely, Allstate has also outpaced the Financial Select Sector SPDR Fund’s (XLF) 43.7% return over the past 52 weeks and a 34.8% YTD return.
Despite reporting better-than-expected Q3 adjusted EPS of $3.91 per share and adjusted revenue of $16.4 billion on Oct. 30, the 1.5% drop in share price the following day stemmed from concerns about rising catastrophe losses, which surged 44.2% year over year to $1.7 billion, pressuring margins. Additionally, elevated claims and operating expenses, as well as weaker performance-based investment income due to softer real estate results, raised caution among investors about future profitability. These factors overshadowed the better-than-expected earnings and revenue performance, leading to the decline in shares.
For the current fiscal year, ending in December, analysts expect ALL’s EPS to grow significantly year-over-year to $16.07. The company’s earnings surprise history is promising. It beat the consensus estimates in the last four quarters.
Among the 20 analysts covering the stock, the consensus rating is a “Moderate Buy.” That’s based on 15 “Strong Buy” ratings, one “Moderate Buy,” two “Holds,” and two “Strong Sells.”
On Nov. 20, BofA raised its price target for Allstate to $285 - the Street-high price target, maintaining a “Buy" rating based on confidence in expanding underwriting margins and positive net policy count growth anticipated by early 2025. This implies a potential upside of 39.8% from the current price. The mean price target of $220.22 represents a premium of only 8.1% to ALL’s current levels.
