A month has gone by since the last earnings report for Voya Financial (VOYA - Free Report) . Shares have added about 2.5% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Voya due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Voya Financial Q2 Earnings Beat, Revenues Fall Y/Y
Voya Financial's second-quarter 2020 net operating income of $1.09 per share beat the Zacks Consensus Estimate by 34.6%. However, the bottom line declined 28.3% year over year. The results reflect poor performance in each of its core businesses.
The company’s revenues of $93 million declined 70.7% from the year-ago quarter.
Net investment income dipped 17.6% to $586 million in the quarter.
Fee income declined 5.2% year over year to $458 million. Premiums rose 5.2% year over year to $607 million.
Total benefits and expenses decreased 0.8% year over year to $1.7 billion, owing to lower operating expenses, net amortization of DAC/VOBA, interest expenses and reduced operating expenses related to consolidated investment entities.
Assets under management and administration were $606 billion as of Jun 30, 2020.
Retirement’s adjusted operating earnings of $37 million decreased 79.4% year over year due to lower fee-based margin primarily on lower bank sweep revenues, lower investment income, higher administrative expenses, offset by positive DAC/VOBA and other intangibles.
Investment Management posted adjusted operating earnings of $20 million, down 51.2% year over year due to lower fee-based margin, primarily driven by lower retail fee revenues and lower investment capital revenues, offset by lower administrative expenses.
It generated $7.1 billion of institutional net flows in the second quarter, which soared 821% year over year.
Employee Benefits’ adjusted operating earnings were $36 million, down 26.5% year over year due to lower investment income and higher administrative expenses, offset by improved underwriting results, courtesy of growth in the Voluntary block and improvement in the loss ratio for Stop Loss.
Corporate incurred adjusted operating losses of $75 million, narrower than the year-ago quarterly loss of $80 million, owing to the removal of stranded costs associated with the company's sale of the majority of its annuities businesses, and lower pension and incentive costs in the reported quarter. It was partially offset by a quarterly dividend payment on the additional preferred stock issued by Voya Financial in the second quarter of 2019 and lower revenues from transition service agreements.
As of Jun 30, 2020, cash and cash equivalents were $1.1 billion, down 5.8% year over year.
As of Jun 30, 2020, total investments were $55.5 billion, up 4.9% year over year.
At the second-quarter end, long-term debt was $3 billion, up 0.03% from 2019 end.
Adjusted debt to capital expanded 200 bps to 32.4% from 2019 end.
As of Jun 30, 2020, book value per share (excluding AOCI) was $38.83, down 6% from 2019 end.
Voya Financial exited the second quarter with $668 million in excess capital.
Estimated combined RBC ratio was 468% as on Jun 30, 2020.
Last month, the company approved a quarterly dividend of 15 cents per share. The dividend will be paid out on Sep 28, 2020, to shareholders of record as of Aug 31.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates revision. The consensus estimate has shifted 22.29% due to these changes.
Currently, Voya has a poor Growth Score of F, a grade with the same score on the momentum front. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Voya has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.