CNA Financial Near 52-Week High: Time to Buy, Sell or Hold the Stock?

CNA Financial Corporation CNA closed at $47.00 on Friday, near its 52-week high of $52.36. This proximity underscores investor confidence. It has the ingredients for further price appreciation.With a market capitalization of $12.71 billion, the average volume of shares traded in the last three months was 0.3 million.CNA Shares are AffordableCNA Financial shares are trading at a forward price-to-book value of 1.24X, lower than the industry average of 1.54X, the Finance sector’s 4.3X and the Zacks S&P 500 Composite’s 7.98X. Its pricing, at a discount to the industry average, gives a better entry point to investors. Also, it has a Value Score of B.Image Source: Zacks Investment ResearchShares of other P&C insurers like RLI Corp. RLI, Arch Capital Group Ltd. ACGL and Cincinnati Financial Corporation CINF are trading at a multiple higher than the industry average.CNA Price PerformanceShares of CNA Financial have gained 5.5% in the past year compared with the industry, the Finance sector and the Zacks S&P 500 composite’s growth of 22.7%, 17.4%, and 9.3%, respectively. CNA Lags Industry and Sector, Outperforms S&P 500 in 1 YearImage Source: Zacks Investment ResearchCNA’s Encouraging Growth Projection The Zacks Consensus Estimate for CNA Financial’s 2025 revenues is pegged at $13.43 billion, implying a year-over-year improvement of 5.4%. The consensus estimate for 2026 earnings per share and revenues indicates an increase of 10.8% and 3.5%, respectively, from the corresponding 2024 estimates.Mixed Analyst Sentiment on CNA Each of the two analysts covering the stock has lowered estimates for 2025 while one has raised the same for 2026 over the past 30 days. Thus, the Zacks Consensus Estimate for 2025 earnings has moved down 5.4% in the past 30 days, while the same for 2026 has moved up 1.3% in the same time frame.Factors Favoring CNACNA Financial’s premiums should continue to grow on solid retention, favorable renewal premium change and new business growth across Specialty, Commercial and International segments.An improving rate environment is favorable for an insurer. Amid the lower rate environment, the company’s fixed-income investment strategy with the highest allocations to diversified investment grade corporates, as well as highly rated municipal securities, should support investment results.CNA Financial has a solid balance sheet with capital remaining above the target levels required for all ratings. It exited the first quarter with statutory capital and surplus in the combined Continental Casualty Companies of $11 billion. CNA Financial continues to maintain a conservative capital structure. It maintains liquidity in the form of cash and short-term investments, which helps to sustain business variability.Strong financial position enables CNA Financial to engage in shareholder-friendly moves like dividend hikes. The insurer’s dividend history is impressive, as it witnessed a 10-year CAGR (2015-2025) of 6.3%. The current dividend yield of 3.6% is better than the industry average of 0.2%. On the back of a disciplined execution, denoted by strong underwriting results and confidence in future earnings performances, the insurer has been hiking dividends, apart from paying special dividends over the past couple of years. Thus, the company remains committed to returning more value to shareholders.CNA’s Favorable Return on CapitalCNA Financial’s trailing 12-month ROE of 11.9% is better than the industry average of 7.8%. Concerns for CNACNA Financial, being a property and casualty insurer, remains exposed to catastrophe loss stemming from natural disasters and weather-related events. Catastrophe losses were primarily related to Hurricane Milton. Catastrophe losses pose an inherent risk to the P&C insurance business because of their unpredictability, inducing volatility in the company’s results.CNA Financial has also been witnessing escalating expenses over the past few years, primarily due to increasing net incurred claims and benefits and amortization of deferred acquisition costs. The company’s net operating income has been affected by this increasing trend, which, in turn, might hurt its overall profitability. ConclusionSolid retention, favorable renewal premium change and new business growth across its segments will continue to induce growth for CNA Financial. As part of wealth distribution to shareholders, CNA also has an impressive dividend history, reflecting capital strength, that are expected to be attractive to generate long-term value for shareholders.Favorable growth estimates, higher return on capital and attractive valuation also add to the upside. However, given its exposure to catastrophe loss and higher expenses, it is better to wait for some more time before taking a call on this Zacks Rank #3 (Hold) stock. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here. Zacks Names #1 Semiconductor StockIt's only 1/9,000th the size of NVIDIA which skyrocketed more than +800% since we recommended it. NVIDIA is still strong, but our new top chip stock has much more room to boom.With strong earnings growth and an expanding customer base, it's positioned to feed the rampant demand for Artificial Intelligence, Machine Learning, and Internet of Things. Global semiconductor manufacturing is projected to explode from $452 billion in 2021 to $803 billion by 2028.See This Stock Now for Free >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report RLI Corp. (RLI): Free Stock Analysis Report Cincinnati Financial Corporation (CINF): Free Stock Analysis Report CNA Financial Corporation (CNA): Free Stock Analysis Report Arch Capital Group Ltd. (ACGL): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks