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03/18/2005 CNA Financial Corp (CNA)
CNA Financial Corp, like ACGL is in the Insurance and Reinsurance business. Insurance may sound like a boring business, but it is certainly a money-spinner for Value Investors. After all, both Ben Graham AND Warren Buffett were heavy investors in Insurance - Geico in particular.
What do we like about CNA? The low P/OCF (aka P/CFO) is
attractive. This measure is supposedly a little contrived for Insurance
companies, and many people don't pay attention to it for this
Industry. The fact remains, however, that Insurance is
pretty good business. Buffett's investment vehicle, Berkshire Hathaway
is still heavily invested in a lot of quality insurance companies which
produce solid returns.
What else is good? Here are some figures. Trailing P/E is 19.63. Two-year Forward P/E is 9.32 on estimated average 2006 earnings of $3.09. In the overall market, Average P/E ratios are still historically high and unlikely to drop that quickly; we should expect CNA to increase in price. On the downside, support should hold around $27.30 to $28, but if not there is stronger support at $26. Ideally conservative investors should either wait for a close above the 52week high of 30.67 (which will signal a new uptrend), or a pullback thereafter.
Note: Estimated 5y growth for CNA is 13%, which is above average for the industry and well above forecasted S&P growth of 10.56%. Interestingly, 2005 growth is estimated at 39.9%.
What else is good? Here are some figures. Trailing P/E is 19.63. Two-year Forward P/E is 9.32 on estimated average 2006 earnings of $3.09. In the overall market, Average P/E ratios are still historically high and unlikely to drop that quickly; we should expect CNA to increase in price. On the downside, support should hold around $27.30 to $28, but if not there is stronger support at $26. Ideally conservative investors should either wait for a close above the 52week high of 30.67 (which will signal a new uptrend), or a pullback thereafter.
Note: Estimated 5y growth for CNA is 13%, which is above average for the industry and well above forecasted S&P growth of 10.56%. Interestingly, 2005 growth is estimated at 39.9%.