It has been about a month since the last earnings report for Brighthouse Financial (BHF - Free Report) . Shares have added about 13.1% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Brighthouse Financial due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Brighthouse Q2 Earnings and Revenues Miss Estimates
Brighthouse Financial's second-quarter 2020 adjusted net income of 41 cents per share missed the Zacks Consensus Estimate by 72.7%. Moreover, the bottom line plunged 83.9% year over year.
The quarter witnessed poor annuity sales, lower premiums and adjusted net investment income, offset by higher Life insurance sales and lower expenses.
Behind the Headlines
Operating revenues of $1.8 billion missed the Zacks Consensus Estimate by 12%. Moreover, the top line decreased 18.2% year over year, primarily due to lower premiums, universal life and investment-type product policy fees, net investment income and other revenues.
Premiums of $193 million decreased 16.8% year over year.
Adjusted net investment income was $656 million in the quarter under review, down 30.4% year over year, due to lower alternative investment income. Investment income yield was 2.98%.
Corporate expenses of $210 million pretax decreased 1.9% sequentially.
Total expenses decreased 15.8% year over year to $1.6 billion on lower policyholder benefits and claims, interest expense on debt, other expenses, and drop in amortization of DAC and VOBA.
Quarterly Segment Update
Annuities adjusted operating income of $171 million was down 35.5% year over year, reflecting lower net investment income, lower fees, and higher deferred acquisition costs ("DAC") amortization, partially offset by lower expenses. Annuity sales decreased 3% to $1.8 billion.
Life generated adjusted operating income of $48 million, down 17.2% year over year reflecting lower net investment income, partially offset by lower DAC amortization and a higher underwriting margin. Life insurance soared 200% year over year to $12 million.
The Run-off segment incurred adjusted loss of $115 million against adjusted earnings of $2 million in the year-ago quarter. The downside was due to lower net investment income.
Adjusted operating loss at Corporate & Other was $93 million, wider than loss of $71 million incurred in the year-ago quarter. The lower loss reflects higher expenses and higher taxes.
As of Jun 30, 2020, cash and cash equivalents were nearly $7.3 billion, up 84% year over year.
Shareholders’ equity of about $20.9 billion at quarter-end increased 28.5% year over year.
Book value per share, excluding preferred stock and accumulated other comprehensive income, was $162.85 as of Jun 30, 2020, up 39.4% year over year.
Share Buyback Program
Brighthouse Financial bought back shares worth $180 million in the second quarter. The company has temporarily its suspended share buyback program.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended upward during the past month. The consensus estimate has shifted 5.99% due to these changes.
At this time, Brighthouse Financial 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 A on the value side, putting it in the top 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. 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, Brighthouse Financial has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.