Should you buy or sell CNA Financial shares after the Q3 earnings beat?

On Monday CNA Financial Corp (NYSE:CNA) shares surged 2.74% after reporting its fiscal Q3 results. The company announced its most recent quarterly results before markets opened, beating the consensus Street estimates for revenue and earnings. CNA’s net premiums grew by 5% from the same period a year ago to $1.9 billion.

The company posted FQ3 non-GAAP earnings per share of $0.87, beating the average for analyst estimates of $0.68. In addition, its GAAP EPS of $0.94 was also $0.25 above expectations, while revenue for the period came in at $2.078 billion, slightly above the Street forecast of $2.061 billion.

CNA Financial looks undervalued

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From an investment perspective, CNA Financial stock trades at an exciting P/E ratio of 9.83, making it a compelling option for value investors. 

On the other hand, analysts expect CNA’s earnings per share to decline by more than 30% this year before bouncing back by 15% next year. 

Therefore, long-term growth investors could opt for alternatives in the market. The stock is up 21% this year, thus slightly underperforming the S&P 500 Index, which has gained more than 23%.

Technically, CNA Financial shares seem to be trading on an ascending channel formation in the intraday chart. However, the stock recently pulled back to bounce off the trendline support, pushing it towards overbought conditions.

Nonetheless, with shares yet to retest the trendline resistance, investors could target extended rebond profits at about $47.23, or higher at $48.25, while $44.98 and $43.90 are crucial support zones.

There is room left to run

In summary, although CNA Financial shares seem to have recently rebounded to rally towards overbought conditions, the stock could extend current gains amid its compelling valuation multiples.

Therefore, it may not be too late to buy the stock.

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