Is Loews Corporation (L) a Hidden Value Play in the Insurance Sector?

The insurance sector in 2025 is a study in contrasts: high interest rates buoy investment income for life insurers, while property-casualty players grapple with rising catastrophe losses and inflation-driven claims. Amid this turbulence, Loews Corporation (L) stands out as a complex but potentially compelling value proposition. With a "Buy" consensus from analysts, a deep-value valuation profile, and a diversified business model, Loews could be a hidden gem for long-term investors willing to navigate its structural challenges.

Wall Street Sentiment: Cautious Optimism Amid Divergent Views

Wall Street analysts have assigned Loews a "Buy" consensus rating, but the underlying sentiment is far from uniform. Of the three analysts covering the stock, 33% recommend a "Strong Buy", while 67% opt for "Hold". This divergence reflects the tug-of-war between Loews' high-margin pharmacy segment and its underperforming insurance and hospitality divisions.

The bullish case hinges on pharmacy growth and EPS momentum. Loews' pharmacy business, which includes its ownership of COPARELLO, is projected to deliver 10.4% EPS growth in 2025 and 9.7% in 2026, driven by rising demand for discount food and specialty drugs. Analysts also highlight the company's $0.063 second-quarter dividend and $1.87 EPS (up from $1.67 in 2Q 2024) as signs of operational resilience.

However, bearish concerns loom large. CNA Financial, Loews' insurance subsidiary, has seen 18.7% year-over-year declines in net income due to inflationary pressures and catastrophe losses. Regulatory scrutiny in the pharmacy sector and declining hotel occupancy rates further cloud the outlook. The $52.67 price target—unchanged from the current stock price—reflects a wait-and-see approach, with analysts emphasizing that Loews' valuation hinges on stabilizing its underperforming segments.

Earnings Momentum: A Tale of Two Segments

Loews' momentum grade of C (average) masks stark segmental divergence. While the Boardwalk Pipelines unit delivered 25.6% net income growth in Q2 2025, the CNA insurance segment and Loews Hotels dragged on performance.

The pharmacy and energy segments are Loews' crown jewels. Boardwalk Pipelines' $274 million EBITDA (up 14% YoY) and $88 million net income (up 26% YoY) underscore its role as a cash-cow, benefiting from natural gas infrastructure demand. Meanwhile, the pharmacy segment's 10.4% EPS growth aligns with broader industry trends, as specialty drug sales and discount food demand outpace inflation.

Conversely, CNA's combined ratio of 94.1% (vs. 94.8% in 2024) and $274 million net income (down from $291 million) highlight the insurance sector's volatility. Catastrophe losses and rising reinsurance costs remain headwinds. The Loews Hotels segment, meanwhile, posted $28 million net income (vs. $35 million in 2024), a decline attributed to higher interest expenses and operational costs tied to new hotel openings.

Undervaluation: A Deep-Value Play in a Premium-Driven Sector

Loews' valuation metrics scream deep value. With a P/E of 15.0, EV/EBITDA of 9.8, and shareholder yield of 5.8% (vs. sector median of 2.1%), the stock trades at a discount to its fundamentals. This is particularly striking in a sector where brokers and P&C insurers trade at EV/EBITDA multiples of 21.0x and 9.4x, respectively.

The key question is whether Loews' conglomerate discount—a common issue for diversified firms—can be overcome. The company's $608 million share repurchase program in FY 2024 and $663 million returned to shareholders in 2025 suggest management is prioritizing capital efficiency. However, the 14.64x EV/EBITDA (vs. forward estimates of 9.14x by 2026) implies a potential upside if CNA's underwriting discipline and Boardwalk's growth can offset the drag from hospitality.

The Investment Case: Balancing Risks and Rewards

Loews is not a straightforward buy. Its segmental volatility and regulatory risks in pharmacy and insurance require careful monitoring. However, the deep-value metrics, dividend yield of ~2.5%, and strategic focus on capital returns make it an intriguing long-term play for investors with a 3–5 year horizon.

Key risks to consider:
- CNA's profitability hinges on catastrophe losses and reinsurance costs.
- Hotel occupancy rates remain sensitive to interest rates and consumer spending.
- Pharmacy regulatory changes could disrupt margins.

Catalysts for upside:
- Boardwalk Pipelines' growth in midstream energy infrastructure.
- Shareholder yield and buybacks enhancing EPS.
- Stabilization in CNA's underwriting margins as catastrophe losses normalize.

Final Verdict: A Cautious "Buy" for Long-Term Investors

Loews Corporation is a high-conviction value play in the insurance sector. While its mixed earnings momentum and segmental challenges warrant caution, the attractive valuation, dividend yield, and strategic capital allocation justify a long-term buy case. Investors should monitor CNA's underwriting performance, Boardwalk's EBITDA growth, and regulatory developments in the pharmacy sector. For those willing to navigate the volatility, Loews offers a compelling opportunity to capitalize on its deep-value metrics and diversified business model.

Investment Recommendation: Buy for long-term horizons (3–5 years), with a stop-loss at $48 to mitigate downside risk.