CNA Stock Trading at a Discount to Industry at 1.22X: Time to Hold?

CNA Financial Corporation CNA shares are trading at a discount compared to the Zacks Property and Casualty Insurance industry. Its forward price-to-book value of 1.22X is lower than the industry average of 1.57X, the Finance sector’s 4.23X and the Zacks S&P 500 Composite’s 8.3X. The insurer has a Value Score of B.

The insurer has a market capitalization of $12.59 billion. The average volume of shares traded in the last three months was 0.4 million.

Shares of other P&C insurers like The Allstate Corporation ALL, Arch Capital Group Ltd. ACGL and The Progressive Corporation PGR are also trading at a multiple higher than the industry average.

Shares of CNA Financial closed at $46.53 on Monday, an 11% discount from its 52-week high of $52.36, indicating room for growth.

CNA’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 11.7% and 3.5%, respectively, from the corresponding 2025 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 60 days. Thus, the Zacks Consensus Estimate for 2025 earnings has moved down 6% in the past 60 days, while the same for 2026 has moved up 1.3% in the same time frame.

CNA Price Performance

Shares of CNA Financial have gained 2.3% in the past year compared with the industry, the Finance sector and the Zacks S&P 500 composite’s growth of 19.2%, 19.9%, and 11.7%, respectively.

Average Target Price for CNA Suggests Upside

Based on short-term price targets offered by two analysts, the Zacks average price target is $49 per share. The average suggests a potential 5.38% upside from the last closing price.

CNA’s Favorable Return on Capital

CNA Financial’s trailing 12-month ROE of 11.9% is better than the industry average of 7.8%.

Factors Favoring CNA

CNA 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.

Conclusion

Solid 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. 

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This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research