Zacks_Analysts' Blog : CNO Gives Capital Position Update - Analyst Blog

CNO Financial Group Inc. (CNO) announced that until August 26, 2011 in the third quarter of 2011, the company had repurchased 3.68 million shares of its common stock, which accounts for 1.5% of the outstanding shares as on June 30, 2011.

The shares were repurchased at an average cost of $6.22, which stood at a total price of $22.9 million. Additionally, CNO will have to make a principal prepayment of the same amount as per the terms of its Senior Secured Credit Agreement.

The repurchase and consequent capital prepayment are expected to reduce CNO’s proforma debt-to-total capital ratio to 18.5% from 18.7% as on June 30, 2011. The regular repurchase of shares indicates the strong financial position as well as high earnings growth of CNO. It also reflects the company’s ability to return wealth to its shareholders from time to time, thereby retaining shareholders’ confidence.

Since the commencement of its $100 million share repurchase program on May 16, 2011, CNO has repurchased 5.89 million shares at an average cost of $6.64 each. The total purchase price for all the repurchased shares amounted to $39.1 million.

Earnings Review

In the second-quarter of 2011, CNO earned net operating income of $57.5 million or 20 cents per share, a couple of pennies ahead of the Zacks Consensus Estimate of 18 cents per share.

Going ahead, the Zacks Consensus Estimate for third quarter earnings is currently at 18 cents per share, up about 15% year-over-year. Of the 5 firms covering the stock, none have revised their estimates in the last 30 days.

For 2011, earnings are expected to be about 75 cents per share, climbing about 15% from 2009.

The total outstanding shares of CNO as on June 30, 2011 numbered 249.4 million and shareholders’ equity on that date stood at $4.6 billion. The largest shareholder of the company is Paulson & Co. Inc., which holds a little less than 10% of CNO’s outstanding shares.

CNO competes with Unum Group (UNM) and Torchmark Corp. (TMK). The company carries a Zacks #2 Rank, which translates into a short-term Buy rating.

On Monday, the shares of CNO closed at $6.47, up 7.65%, on the New York Stock Exchange.