Loews Corporation (L - Analyst Report) reported fourth-quarter 2014 operating earnings of 57 cents per share, surpassing the Zacks Consensus Estimate by about 7.5%. Earnings, however, lagged about 11% year over year on lower investment income.

Loews Corporation - Earnings Surprise | FindTheBest

Including loss from discontinued operations (sale of HighMount Exploration & Production, LLC and CNA Financial Corp's annuity and pension deposit business), net income came in at 55 cents, rebounding from the year-ago loss of 51 cents per share.

For full-year 2014, operating income of $2.52 per share missed the Zacks Consensus Estimate by a couple of cents and declined 15% year over year. Net income of $1.55 per share improved 1% from the year-ago earnings.

Revenues

Loews’ total revenue declined 6.7% year over year to $3.5 billion in the quarter. Lower insurance premiums, a decline in investment income as well as decreased contract drilling revenues induced the downside. Revenues for 2014 slid 2% year over year to $14.3 billion.

Behind the Headlines

Total expenses decreased 5.3% year over year to $3.2 billion on lower insurance claims & policyholders' benefits as well as contract drilling expenses.

CNA Financial’s (CNA - Snapshot Report) revenues declined 6.7% over the prior-year period to $2.4 billion. It reported net income attributable to Loews Corp. of $186 million, down 0.5% year over year. The decline came from lower net investment income and charges related to pension plan settlement. However, a benign catastrophe environment, improved current accident year underwriting results and favorable net prior year development came as respites.

Boardwalk Pipeline Partners, LP’s (BWP - Snapshot Report) revenues decreased 1.9% to $305 million from the prior-year level. Its reported net income attributable to Loews Corp. improved nearly threefold to $11 million.

Loews Hotels’ revenues improved about 47% year over year to $132 million. Earnings of $3 million rebounded from the year-ago loss of $5 million on higher equity earnings from joint venture properties.

Diamond Offshore Drilling’s (DO - Analyst Report) revenues declined 7% year over year to $677 million. Earnings improved 6.8% year over year to $47 million in the quarter. Earnings benefitted from an absence of tax provision. The segment still witnesses lower rig utilization.

Book value as of Dec 31, 2014 was $50.95 per share, up about 3.2% from $49.38 as of Dec 31, 2013.

Share Repurchase

During the fourth quarter of 2014, Loews spent $207 million on buying back 5 million shares taking the full-year tally to 14.6 million shares repurchased for $622 million.

Our Take

Loews remains on track to strengthen its hotel business as evident by a considerable improvement in its top line. Continued share repurchases lend steady support to the bottom line.

While Diamond Offshore experienced lower rig utilization, a still-soft interest environment continues to weigh on the results.

Loews currently carries a Zacks Rank #4 (Sell).

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