CNO Financial Group, Inc. (NYSE: CNO)

Sector: Financial Services Industry: Insurance - Life CIK: 0001224608
Market Cap 10.32 Bn
P/B 2.04
P/E 56.00
P/S 2.38
ROIC (Qtr) 5.96
Div Yield % 0.49
Rev 1y % (Qtr) 5.23
Total Debt (Qtr) 4.05 Bn
Debt/Equity (Qtr) 1.55
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About

CNO Financial Group, Inc. (CNO), a Delaware corporation, operates in the insurance industry, specializing in health insurance, annuity, individual life insurance, and other insurance and financial services products. The company primarily serves middle-income pre-retirees and retired Americans, which it considers attractive, underserved, and high-growth markets. CNO's main business activities involve developing, marketing, and administering a variety of insurance products. Its operations span across several countries and regions, with a significant...

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Investment thesis

Bull case

  • Strong tangible asset base of 38.30B provides 9.45x coverage of total debt 4.05B, indicating robust asset backing and low credit risk.
  • Tangible assets of 38.30B provide exceptional 178.54x coverage of deferred revenue 214.50M, showing strong service capability backing.
  • Operating cash flow of 671M provides strong 3.13x coverage of deferred revenue 214.50M, indicating service delivery capability.
  • Cash position of 1.24B provides strong 5.79x coverage of deferred revenue 214.50M, ensuring service delivery capability.
  • Retained earnings of 2.34B represent substantial 0.90x of equity 2.61B, indicating strong internal capital generation.

Bear case

  • Operating cash flow of 671M barely covers its investment activities of (917.70M), with a coverage ratio of -0.73, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • Operating cash flow of 671M provides thin coverage of dividend payments of (66.40M) with a -10.11 ratio, suggesting potential dividend sustainability issues if operational performance deteriorates.
  • Free cash flow of 671M represents just -2.48x of debt issuance (270.80M), suggesting concerning reliance on leverage rather than internal cash generation for growth.
  • Operating cash flow of 671M barely covers operating expenses of 1.44B with a 0.47 ratio, suggesting thin operational efficiency margins and limited flexibility.
  • Operating cash flow of 671M is outpaced by equity issuance of (350.20M) (-1.92 ratio), indicating concerning reliance on equity markets for funding operations.

Peer comparison

Companies in the Insurance - Life
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 MET Metlife Inc 81.60 Bn 15.56 1.20 20.23 Bn
2 AFL Aflac Inc 78.90 Bn 18.62 3.49 8.69 Bn
3 MFC Manulife Financial Corp 63.37 Bn 16.53 2.20 10.71 Bn
4 PUK Prudential Plc 38.02 Bn 21.76 0.58 -
5 PRU Prudential Financial Inc 36.75 Bn 10.28 0.60 32.56 Bn
6 PRI Primerica, Inc. 19.72 Bn 133.62 17.82 0.65 Bn
7 UNM Unum Group 18.81 Bn 64.52 1.80 3.77 Bn
8 GL Globe Life Inc. 14.78 Bn 13.56 2.87 2.71 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 0.35 0.25
EV to Cash from Ops. EV/CFO 20.82 38.74
EV to Debt EV to Debt 3.28 4.98
EV to EBIT EV/EBIT 52.02 18.23
EV to EBITDA EV/EBITDA 29.19 14.59
EV to Free Cash Flow [EV/FCF] EV/FCF 20.82 34.05
EV to Market Cap EV to Market Cap 1.29 1.00
EV to Revenue EV/Rev 3.06 2.53
Price to Book Value [P/B] P/B 2.04 2.19
Price to Earnings [P/E] P/E 56.00 26.16
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Div Coverage (Qtr) 4.44 3.59
Dividend Payout Ratio % Div Payout % (Qtr) 22.80 22.49
Dividend per Basic Share Div per Share (Qtr) 0.66 1.48
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 9.50 0.41
Interest Coverage Int. cover (Qtr) 2.60 7.54
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex Growth (1y) % 0.00 -27.98
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) -0.30 19.69
Dividend Growth (1y) % Div 1y % (Qtr) 6.45 15.89
EBIAT Growth (1y) % EBIAT 1y % (Qtr) 1.44 89.68
EBITDA Growth (1y) % EBITDA 1y % (Qtr) 1.98 64.87
EBIT Growth (1y) % EBIT 1y % (Qtr) 1.98 82.78
EBT Growth (1y) % EBT 1y % (Qtr) 8.05 344.70
EPS Growth (1y) % EPS 1y % (Qtr) 14.62 2,261.01
FCF Growth (1y) % FCF 1y % (Qtr) 9.39 186.52
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) 7.01 50.91
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.12 0.13
Cash Payout Ratio Cash Payout (Qtr) 0.10 0.12
Cash Ratio Cash Ratio 0.00 0.00
Current Ratio Current Ratio 0.00 0.00
Debt to Equity Ratio Debt/Equity (Qtr) 1.55 0.49
Interest Cover Ratio Int Coverage (Qtr) 2.60 7.54
Times Interest Earned Times Interest Earned (Qtr) 2.60 7.54
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 14.00 15.04
EBIT Margin % EBIT Margin % (Qtr) 14.01 14.45
EBT Margin % EBT Margin % (Qtr) 8.61 12.36
Gross Margin % Gross Margin % (Qtr) 46.40 45.61
Net Profit Margin % Net Margin % (Qtr) 6.60 10.89