Is Allstate Setting Up for a Big Move? – October 26, 2021

On the basis of premium sales, Allstate Corporation (ALL) is one of the largest U.S. property-casualty insurers. Personal auto represents the largest percentage of revenue, but the company offers homeowners insurance and other insurance products. Its products are sold in North America primarily by about 10,000 company agencies.

The company is seeing growth through acquisitions and in its emerging businesses. This has resulted in the firm consistently writing higher premiums. Its agreement to sell Allstate Life Insurance company will help streamline its business. This will allow the company to focus on higher growth areas.

ALL has a debt-to-equity ratio of 0.3. A figure this low means the company’s shareholder equity can cover any business downturn. From a growth standpoint, ALL has grown earnings per share an average of 45.2% per year over the past five years. However, analysts expect earnings to fall 43.5% year over year in the third quarter.

The stock looks undervalued with a trailing P/E of 5.37 and a forward P/E of 9.62. This has led to a Value Grade of B in our POWR Ratings system. ALL has shown mixed performance since mid-May. This is evident in the chart below.

Take a look at the 1-year chart of ALL below with added notations:

ALL took off at the end of 2020, eventually stalling between strong support of $125 (green) and a $140 resistance (red). Whichever of those two key levels breaks will likely dictate the stock’s next big move.

ALL is trading in a sideways range. Long trades could be entered on a pullback to support, or on a break of resistance, with a protective stop set underneath the point of entry.

ALL shares were trading at $129.94 per share on Tuesday morning, up $0.94 (+0.73%). Year-to-date, ALL has gained 20.49%, versus a 23.62% rise in the benchmark S&P 500 index during the same period.

Author: Christian Tharp