Chubb Beats on EPS But GAAP Results Lag

Seth Jayson, The Motley Fool
Updated

Chubb (NYS: CB) reported earnings on Jan. 26. Here are the numbers you need to know.

The 10-second takeaway
For the quarter ended Dec. 31 (Q4), Chubb met expectations on revenue and beat expectations on earnings per share.

Compared to the prior-year quarter, revenue increased, and GAAP earnings per share contracted significantly.

Gross margins improved, operating margins shrank, and net margins dropped.

Revenue details
Chubb reported revenue of $2.97 billion. The nine analysts polled by S&P Capital IQ wanted to see revenue of $2.97 billion. Sales were 1.8% lower than the prior-year quarter's $2.85 billion.

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Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions.

EPS details
Non-GAAP EPS came in at $1.63. The 21 earnings estimates compiled by S&P Capital IQ forecast $1.58 per share on the same basis. GAAP EPS of $1.04 for Q4 were 21% lower than the prior-year quarter's $2.02 per share.

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Source: S&P Capital IQ. Quarterly periods. Figures may be non-GAAP to maintain comparability with estimates.

Margin details
For the quarter, gross margin was 47.5%, 1,730 basis points better than the prior-year quarter. Operating margin was 18.6%, 1,380 basis points worse than the prior-year quarter. Net margin was 13.5%, 470 basis points worse than the prior-year quarter.

Looking ahead
Next quarter's average estimate for revenue is $2.97 billion. On the bottom line, the average EPS estimate is $1.46.

Next year's average estimate for revenue is $12.28 billion. The average EPS estimate is $5.77.

Investor sentiment
The stock has a four-star rating (out of five) at Motley Fool CAPS, with 530 members out of 554 rating the stock outperform, and 24 members rating it underperform. Among 230 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 222 give Chubb a green thumbs-up, and eight give it a red thumbs-down.

Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on Chubb is outperform, with an average price target of $70.67.

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At the time thisarticle was published Seth Jayson had no position in any company mentioned here at the time of publication. You can view his stock holdings here. He is co-advisor ofMotley Fool Hidden Gems, which provides new small-cap ideas every month, backed by a real-money portfolio. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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