American International (NYSE:AIG) Q3 Earnings: What Can You Expect?

in EARNINGS/INVESTING IDEAS by

American International Group, Inc. (NYSE:AIG) is scheduled to report Q3 earnings results after markets close for trading on November 5, 2020.

The company is expected to report earnings of $0.58/share on revenue of $10.788 billion. The consensus earnings per share (EPS) of $0.58/share is based on a poll of 16 analysts and represents a growth in eps of 3.4% over the same quarter last year, when the company reported earnings of $0.56/share.

The revenue forecast of $10.788 billion based on a poll of 6 analysts implies a year-over-year (YoY) decline in revenue of −16.5%. Last year the company reported $12.914 billion in revenue for the quarter.

Expected to report EPS growth of 3.4% for Q3, 2020
Metric Expected Prior Year YoY Change
Revenue $10,788.27 $12,914.00 −16.5%
EPS $0.58 $0.56 3.4%

Earnings Call Trends

Historically, management has exceeded analyst expectations 4 out of the last 8 tracked quarters, and missed expectations 4 quarters.

What are your expectations from American International Group, Inc. for earnings this quarter? Let us know in the comments!

Analyst Expected vs. Reported EPS
Quarter Expected Reported Surprise Result
Q2, 2020 $0.56 $0.66 18.0% Beat
Q1, 2020 $0.77 $0.11 −85.6% Missed
Q4, 2019 $1.01 $1.03 2.5% Beat
Q3, 2019 $1 $0.56 −44.3% Missed
Q2, 2019 $1.16 $1.43 23.6% Beat
Q1, 2019 $1.06 $1.58 49.5% Beat
Q4, 2018 $0.45 -$0.63 −240.6% Missed
Q3, 2018 $0.06 -$0.34 −694.0% Missed

In the following table, we summarize the company’s stock price movements after earnings releases. The “Price Day Prior” column shows the closing stock price on the day before the earnings report, and the “Price Next Day” column shows the stock price at the end of the trading day after the earnings report. After the last earnings report for the period ending June 30, 2020, the stock price reacted by falling −7.5%.

Stock Price Performance After Earnings
Report Date Price Day Prior Price Next Day Change % Result
August 3, 2020 $32.14 $29.72 −7.5% Decline
May 4, 2020 $23.90 $25.06 4.9% Increase
February 12, 2020 $54.47 $50.93 −6.5% Decline
February 12, 2020 $54.47 $50.93 −6.5% Decline

The other question to consider is one of earnings manipulation. There is a lot of pressure on management each quarter to deliver on earnings expectations. The Beneish M-Score is a statistical model that provides some insight into whether the company might be manipulating earnings. With a Beneish M-Score of −2.71, the model suggests that the company is not likely to be an earnings manipulator. A value of −2.71 implies a 0.3% chance of earnings manipulation.

Fundamentals And Technical Analysis

American International Group, Inc. is currently trading at $30.49/share, down −2.2% for the day. The company is trading at approximately 54.0% of its 52-week high of $56.42/share. The company’s stock price is up 2.6% since the last earnings report and down −3.7% over the previous week. The company’s 14 Day Relative Price Index (RSI) of 56.42 suggests the company is trading in technically neutral territory. The RSI is considered overbought when above 70 and oversold when below 30.


NYSE:AIG Stock Price Chart
Source: Finbox

The current share price implies a price-to-earnings (P/E) multiple of −5.60 and a forward P/E multiple of 11.94.

American International Group, Inc.’s current share price also implies a price-to-book (P/B) multiple of 0.42. The following table summarizes some other key fundamental ratios:

Data as of October 28, 2020
Metric Value
Last Reported Fiscal Period Key FY2020.Q2
Period End Date June 30, 2020
Stock Price (Current) $30.49
P/E Ratio −5.6x
P/E Ratio (Fwd) 11.9x
PEG Ratio 0.0
Total Debt / Total Capital 58.5%
Levered Free Cash Flow $1.669 billion
EV / EBITDA −19.8x

Finbox

American International Group, Inc. is a large-cap stock with a market capitalization of $26.842 billion and a total enterprise value of $63.783 billion. The company operates in the Financials sector and the Insurance industry.

American International Group, Inc. provides insurance products for commercial, institutional, and individual customers in North America and internationally. The company’s General Insurance segment offers general liability, environmental, commercial automobile liability, workers’ compensation, excess casualty, and crisis management insurance products, as well as various risk-sharing and other customized structured programs; commercial, industrial, and energy-related property insurance; and aerospace, political risk, trade credit, portfolio solutions, surety, crop, and marine insurance. It also provides professional liability insurance products for a range of businesses and risks, including directors and officer’s liability, mergers and acquisitions, fidelity, employment practices, fiduciary liability, cyber risk, kidnap and ransom, and errors and omissions insurance. In addition, this segment offers personal auto and property insurance, voluntary and sponsor-paid personal accident, and supplemental health products; extended warranty insurance products; and travel insurance products. Its Life and Retirement segment offers variable annuities, fixed index and fixed annuities, and retail mutual funds; group mutual funds, individual annuity and investment products, and financial planning and advisory services; and term life and universal life insurance. This segment also provides stable value wrap products, and structured settlement and pension risk transfer annuities; and corporate- and bank-owned life insurance and guaranteed investment contracts. This segment sells its products through independent marketing organizations, independent insurance agents, financial advisors, direct marketing, banks, wirehouses, and broker-dealers. The company’s Legacy Portfolio segment offers legacy insurance products. American International Group, Inc. was founded in 1919 and is headquartered in New York, New York.

Expertise: financial modeling, mergers & acquisitions. Andy is also a founder at finbox.io, where he’s focused on building tools that make it faster and easier for investors to do investment research. Andy’s background is in investment banking where he led the analysis on over 50 board advisory engagements involving mergers and acquisitions, fairness opinions and solvency opinions. Some of his board advisory highlights: - Sears Holdings Corp.’s $620 mm spin-off via rights offering of Sears Outlet, Hometown Stores and Sears Hardware Stores. - Cerberus Capital Management’s $3.3 bn acquisition of SUPERVALU Inc.’s New Albertsons, Inc. assets. Andy can be reached at andy@finbox.io or at +1 (516) 778-6257.

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