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Why Investing in Aflac Makes Sense for Your Portfolio Now

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Aflac Incorporated (AFL - Free Report) is well-poised for growth on the back of its strong U.S. business and a solid capital position.

Over the past 30 days, the company’s earnings estimates for 2020 have been revised 0.5% upward. This, in turn, reflects analysts' optimism on the stock.

The company also retained investors' bullish sentiments surrounding the stock by maintaining its positive surprise trend in three of the last four quarters, the average beat being 7.50%. This definitely vouches for the company’s operational excellence.

Shares of this Zacks Rank #2 (Buy) company have rallied 16.5% in the past year, outperforming its industry’s growth of 5.7%.

The company is well-poised for growth, also apparent from its Value Score of B. Our research shows that stocks with a Value Score of A or B when combined with a top Zacks Rank #1 (Strong Buy) or 2 offer the best opportunities in the value investment space.

The company’s U.S. Segment consistently performs well, evident from its 10-year CAGR of 2.8%. Under the same segment, the organization has undertaken several growth initiatives, such as the adoption of Everwell and One Pay Day for deeper penetration, delivery of value-added services and increased client retention, product partnering to drive improved account values and employee access plus investment in administrative capabilities. We expect all these endeavors to boost top-line growth.

Moreover, the company steadily retains a strong risk-adjusted capital resource at its operating subsidiaries, supported by consistent earnings and stable liquidity. The entity also has a strong capital management strategy in place.

Additionally, its Japan business is well poised for growth over the long haul on the back of its significant presence in the East Asian country, which endures an aging economy. In fact, Aflac Japan contributed nearly 70% to the company’s total revenues in 2018 and is a major player in cancer insurance in the island nation.

The company is anticipated to witness long-term revenue growth, attributable to changes in Japan's economy and an aging population, which has put immense pressure on Japan's national health care system. The recent alliance with Japan Post augurs well for the segment and we expect new products to be innovated during 2019. Aflac Japan also has agreements with approximately 90% of the banks across Japan in order to sell its products. Aflac Japan's partnerships throughout the banking sector enable it to reach a wider demographic of potential customers.

The Zacks Consensus Estimate for the company’s current-year earnings is pegged at $4.22, representing a year-over-year increase of 1.4% on revenues of $21.79 billion.

For 2020, the Zacks Consensus Estimate for earnings stands at $4.44 on $21.85 billion revenues, translating into a respective 5.3% and 0.3% year-over-year rise.

Other Stocks to Consider

Investors interested in the insurance industry might also look into some other top-ranked stocks like The Berkshire Hathaway Inc. (BRK.B - Free Report) , Torchmark Corporation and RLI Corp. (RLI - Free Report) . You can see the complete list of today’s Zacks #1 Rank stocks here.

Berkshire Hathaway engages in insurance, freight rail transportation and utility businesses. The company sports a Zacks Rank #1 (Strong Buy) and delivered a beat in three of the last four quarters, the average positive surprise being 4.31%.

Torchmark Corporation offers multiple life and health insurance products and annuities in the United States, Canada, and New Zealand. It came up with average trailing four-quarter earnings surprise of 2%. It has a Zacks Rank of 2.

RLI Corp underwrites property and casualty insurance in the United States and around the globe. The stock is a Zacks #2 Ranked player and pulled off average four-quarter beat of 144.08%.

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