CNO Financial Group (CNO) Margin Compression To 5.1% Challenges Bullish Growth Narratives

CNO Financial Group (CNO) has wrapped up FY 2025 with fourth quarter revenue of US$1,143.1 million and basic EPS of US$0.98, alongside net income excluding extra items of US$92.9 million, giving investors fresh numbers to weigh against a share price of US$44.64. Over recent periods, the company has seen quarterly revenue range from US$1,004.1 million to US$1,188.7 million and basic EPS move between US$0.21 and US$1.62, while trailing 12 month EPS has shifted from US$3.81 to US$2.35. This sets the backdrop for how margins and earnings quality now look. With trailing net profit margin at 5.1% versus 9.1% a year earlier and a large one off loss in the mix, this set of results leaves investors focused squarely on how durable those margins really are.

See our full analysis for CNO Financial Group.

With the latest figures on the table, the next step is to see how these margins, earnings trends and forecasts line up with the most widely discussed narratives around CNO and where those stories might be challenged by the data.

Curious how numbers become stories that shape markets? Explore Community Narratives

Trailing EPS swings and one off loss

• Over the last 12 months, basic EPS on a trailing basis moved from US$3.81 to US$2.35, and that period included a one off loss of US$100.4 million that fed into reported earnings quality.
• What stands out for the bullish view that focuses on forecast EPS growth around 17% a year is that the current trailing EPS of US$2.35 sits well below the earlier US$3.81 level,
  • which means that any upbeat stance is leaning on the expectation of future earnings trends rather than the most recent trailing profit run rate of US$229.3 million on US$4.5b of revenue.
  • At the same time, the one off US$100.4 million loss and trailing five year earnings falling about 11.6% a year give you a reminder that past EPS swings have been significant even before any future growth is considered.

Investors weighing that earnings reset against the more optimistic growth forecasts may want to see how different scenarios are framed in the broader market view of the company before deciding how much weight to put on the trailing EPS line. 📊 Read the full CNO Financial Group Consensus Narrative.

Margins tighten to 5.1% profit

• Reported net profit margin over the last year was 5.1% compared with 9.1% a year earlier, on trailing revenue of about US$4.5b and net income excluding extra items of US$229.3 million.
• Critics highlight this margin compression as a key bearish point, and the data backs up that concern alongside weak interest coverage and insider selling,
  • because profit margins in the latest 12 month set are lower than the prior year while interest payments are flagged as not well covered by earnings, which points straight to financing pressure in the current figures.
  • On top of that, the large one off US$100.4 million loss and margin step down together help explain why some bearish investors focus on the durability of profitability rather than just headline EPS for single quarters like Q4 FY 2025.

If you are trying to understand how those thinner margins fit with the more cautious arguments around leverage and earnings quality, it can help to see how skeptical analysts frame the downside case before you weigh it against the growth story. 🐻 CNO Financial Group Bear Case

DCF value vs 18.4x P/E

• At a share price of US$44.64, the stock screens below the DCF fair value of about US$68.30, yet it trades on an 18.4x P/E compared with 12.9x for the broader US insurance industry and 9.9x for peers.
• Supporters of the more bullish angle often point to that roughly 34.6% gap between price and DCF fair value, and the figures give that argument some backing but with clear trade offs,
  • because the discounted cash flow model suggests potential upside to US$68.30 while the current earnings base of US$2.35 per share and 5.1% net margin are what underpin today’s 18.4x multiple.
  • At the same time, the modest 1.52% dividend yield and forecast revenue growth of about 0.8% a year show that any optimistic stance is balancing a richer P/E against income that is present but not especially high and top line growth that is expected to be relatively low.

Next Steps

Don't just look at this quarter; the real story is in the long-term trend. We've done an in-depth analysis on CNO Financial Group's growth and its valuation to see if today's price is a bargain. Add the company to your watchlist or portfolio now so you don't miss the next big move.

See What Else Is Out There

Thinner 5.1% profit margins, a one off US$100.4 million loss and flagged weak interest coverage all point to pressure on earnings quality and balance sheet strength.

If that mix of margin strain and financing pressure makes you cautious, you might want to focus on companies with stronger cushions using our solid balance sheet and fundamentals stocks screener (45 results) today.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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