Loews (NYSE: $L) Posts Robust Earnings Growth In Q4 and Full Year 2023

Loews Corporation (NYSE: $L) is an American conglomerate based in NYC. It is a diverse company with stakes in various sectors, including energy, insurance, hospitality, and packaging.

Loews Corporation reported fourth quarter and full year 2023 earnings results on Monday, February 5, 2024, before markets opened.

Loews’ Fourth Quarter Results

In the fourth quarter of 2023, Loews Corporation reported a net income of $446 million, equivalent to $1.99 per share. That was a 26% increase compared to  $355 million, or $1.49 per share, reported at the same time last year. Revenue for the fourth quarter came in at $4.26 billion, a 12.3% increase from the $3.80 billion reported last year. 

For the full year, Loews reported a net income of $1.4 billion, or $6.29 per share, a 74% Y/Y rise compared to the $822 million net income, or $3.38 per share reported in fiscal 2022. Revenue for the full year came in at $15.90 billion, compared to the 14.04 billion reported last year. 

Here is how its subsidiaries performed in the quarter: 

Boardwalk

Boardwalk Pipeline, one of Loews’ subsidiaries, posted improved results driven by higher revenues from re-contracting. Net income rose 11% to $92 million compared to $83 million reported last year. EBITDA grew 5% for the quarter to $260 million, compared to $248 million reported last year.

CNA

CNA Financial Corporation (NYSE: CNA) had a 37% increase in core income to $362 million, compared to $265 million reported last year. Its net income attributable to Loews rose 57% to $336 million from the $214 reported in Q422. Net income growth was attributed to investment gains in fiscal year 2023 compared to investment losses in fiscal year 2022. 

Loews Hotels

Loews Hotels reported a net income of $32 million compared to $33 million last year. Net income was impacted by lower quality income from joint ventures due to a drop in occupancy rates and higher operating costs. 

Corporate & Other

The segment reported a net loss of $14 million, compared to the $25 million net income reported in the previous year. 

Loews’ Balance Sheet

As of December 31, 2023, the parent company held $2.6 billion in cash and investments with a debt of $1.8 billion.

Excluding AOCI, the book value per share grew 9% with a price of $81.92 as of December 31, 2023, from the previous value of $74.88 as of December 31, 2022. The strong performance was attributed to strong operating results during 2023 and share buybacks. 

The CEO attributed the 74% surge in Loews’ net income to the impressive results performance of its subsidiaries.

James S. Tisch, CEO and President of Loews, said, “Loews had a spectacular quarter, with each of our subsidiaries producing strong results.” .

Stock Buyback

Loews announced that during Q4, it had bought back 2.1 million and 14 million shares of common stock at $141 million and $852 million, respectively. It also revealed that it bought 4.5 million worth of CNA stock for $178 million. The company stated that it will continue to buy back its shares and those of its subsidiaries. 

Stock Update: $L

L stock closed trading on Monday, February 5, 2024, 0.34% lower at $72.79 per share, a $0.25 decline in its share price. That was despite some initial gains in the morning session when prices rose 5%. Year to date, the stock is up 3.31% and has gained 18.47% in the past 12 months. 

IS L Stock Undervalued? 

Loews Corporation had a good fourth quarter. Its revenue and net income increased tremendously. Additionally, it announced its plans to continue buying back its stock. However, despite the impressive performance, the stock closed trading 0.34% lower at $72.79 per share on February 5, 2024.

One explanation from Bloomberg in a July 17, 2023 article is analysts’ lack of coverage for the stock. In his Q223 remarks on July 31, 2023, Loews CEO James Tisch reiterated the opinion of the Bloomberg article. 

He stated that as analysts switched firms or retired, coverage for L stock had dropped off. Tisch opined that the stock gets little covered because its “multi-industry holding company structure does not fit within the banks’ sector-specific coverage models.”

In his Q423 remarks, Loews’ CEO stated that the company believed its stock was highly undervalued. Consequently, share buybacks would remain integral to their capital allocation strategy. 

The CEO explained why he believed L stock was undervalued. He pointed out that Loews has a market cap of $16.2 billion. When you subtract their CNA stake of $10.8 billion and the $800 million net cash position, the value of the non-publicly traded subsidiaries is $4.6 billion. 

Consequently, the current price of L stock was an extraordinarily cheap valuation when considering the total value of Loews Hotels’ adjusted EBITDA and Boardwalk’s EBITDA was around $1.3 billion. 

Should You Buy L Stock?

Over the past five years, L stock has delivered strong quarterly and annual results. However, the lack of analysts’ coverage may have affected its performance. For instance, if you had invested in L stock five years ago, that stock would have increased in value by 53.34% today. 

Based on the metrics pointed out by the CEO and the lack of analysts’ coverage, the company’s belief that its stock is undervalued is plausible. Consequently, it would be a great addition to your portfolio. 

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