Earnings Preview: American International Group

American International Group

is scheduled to report fourth-quarter 2011 results tomorrow, February 23, after the markets close. The stock of this global insurance giant has been on the rise since the beginning of the year. And analysts are expecting a profit instead of the loss AIG saw in the year-ago period. But the consensus EPS estimates have been slipping over the past 90 days for both the quarter and the full year, and the revenue picture still is not pretty. Analysts are looking for the company to report that its per-share earnings came to $0.61 for the quarter and that revenue totaled $13.2 billion. In the same quarter of last year, AIG posted a loss of $16.20 and $21.1 billion in sales. But note that the EPS estimate was $0.64 some 90 days ago. Also, in the past six quarters AIG has topped consensus EPS estimates three times and fallen short three times. Looking back to the previous quarter, AIG reported a wider than expected loss of a $4.1 billion, or $2.16 a share, and said its revenue fell 33.4% to $12.7 billion. The company attributed the disappointing results to declining equity markets, widening credit spreads, and declining interest rates, as well as a charge related to its aircraft-leasing unit. For the full year, the consensus estimate calls for $0.77 per share earnings, compared to a net loss of $14.49 the previous year. That EPS estimate was $0.85 just 60 days ago. And full-year revenues are expected to have decreased 37.3% year over year to $48.4 billion.

New York-based American International Group operates property and casualty insurance networks worldwide and conducts activities in the U.S. life insurance and retirement services industry. It also is involved in commercial aircraft leasing and residential mortgage guaranty insurance businesses. The company was founded in 1967 and now is an S&P 500 component with a market cap of $51.7 billion. Competitors include Travelers Companies

, Hartford Financial Services

and American Financial Group

. Travelers fell short of EPS estimates in the most recent report. Hartford beat low EPS expectations and is said to be considering splitting into two companies. American Financial's EPS were also better than expected.

During the three months that ended in December, AIG won approval for a $450 million workers compensation settlement, announced a $1 billion share buyback program, and paid back $972 million on its bailout from 2008. The stock also hit a multiyear low in November.

AIG's forward earnings multiple is less than the industry average P/E ratio. The company has a long-term earnings per share growth forecast of 9.5%, and its operating margin is in line with the industry average. Short interest is 2.4% of the float. Of 18 analysts surveyed who follow the stock, all but three of them rate it a Hold. None recommend selling it. Their mean price target on the shares is hardly any higher than the current share price though. The share price has risen 17.4% year to date but is still 35.3% lower than a year ago. It is above the 50-day and 200-day moving averages, and the former is on track to cross above the latter soon. The stock has outperformed American Financial Group and Travelers Group, as well as the Dow and the S&P 500, over the past six months.