Brighthouse Financial (BHF - Free Report) is well-poised for growth, riding on a compelling suite of life and annuity products, strong market presence and effective capital deployment. This Zacks Rank #3 (Hold) leading provider of annuity and life insurance products in the United States has a favorable VGM Score of B.
The Zacks Consensus Estimate for 2020 and 2021 earnings has moved up 2.2% and 1.2%, respectively in the past 30 days, reflecting analysts’ optimism. Brighthouse Financial beat estimates in three of the last four quarters.
Brighthouse Financial is poised to benefit from growing individual insurance market, given expansive and compelling suite of life and annuity products and a strong market presence. Aiming to be a premier player in the industry, it remains focused on ramping up new sales of life insurance products, expanding distribution network and transitioning the business mix to less capital-intensive products. It targets total annual annuity sales of more than $8.5 billion and $250 million of total life sales in 2021.
Brighthouse Financial has been investing heavily in technology infrastructure. It estimates establishment costs to be between $125 million and $135 million in 2020 and $55 million to $65 million in 2021, all on a pre-tax basis.
Given a well-diversified and high quality portfolio as well as conservative investment strategy, we expect investment income yield to improve despite current low interest rate environment.
Given solid execution of strategies to drive profitability, enhanced financial strength and flexibility, the company’s target to pay back $1.5 billion of capital to shareholders by year-end 2021 still holds good.
The Zacks Consensus Estimate for 2020 and 2021 is pegged at $7.03 and $11.14, indicating nearly 204% and 59% year-over-year increase.
Shares of Brighthouse Financial have lost 27.1% year to date, compared with the industry's decline of 19.4%.
Though the life insurer has been incurring higher expenses over the last several years, it intends to lower corporate expenses by $150 million on a run-rate basis by the end of 2020 and by another $25 million by 2021.
Stocks to Consider
Some better-ranked companies from the same space are Athene Holding Ltd (ATH - Free Report) , Manulife Financial Corp (MFC - Free Report) and Sun Life Financial Inc (SLF - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Athene delivered an earnings surprise of 31.05% in the last-reported quarter.
Manulife came up with an earnings surprise of 30.23% in the last-reported quarter.
Sun Life Financial delivered an earnings surprise of 10.98% in the last-reported quarter.
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