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Why Is Brighthouse Financial (BHF) Up 12.9% Since Last Earnings Report?
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A month has gone by since the last earnings report for Brighthouse Financial (BHF - Free Report) . Shares have added about 12.9% 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 the most recent earnings report in order to get a better handle on the important catalysts.
Brighthouse Financial third-quarter 2020 adjusted operating income of $4.19 per share outpaced the Zacks Consensus Estimate by 26.6%. Moreover, the bottom line improved 79.8% year over year.
The quarter witnessed higher annuity and life sales, and improved net investment income, partly offset by lower premiums and elevated expenses.
Behind the Headlines
Operating revenues of $2.2 billion increased 2.8% year over year, primarily due to higher universal life and investment-type product policy fees, net investment income and other revenues, partly offset by lower premiums.
Premiums of $184 million slumped 14% year over year.
Adjusted net investment income was $1 billion in the quarter under review, up 7.9% year over year, due to increased alternative investment income. Net investment income yield came in at 4.42%.
Corporate expenses of $204 million pre-tax decreased 2.9% sequentially.
Total expenses escalated 74.2% year over year to $4.2 billion on higher interest credited to policyholder account balances, rise in policyholder benefits and claims, and increased amortization of DAC and VOBA.
Quarterly Segment Update
Annuities’ adjusted operating income of $387 million soared 90.6% year over year. The results were primarily driven by reduced expenses, and lower deferred acquisition costs ("DAC") amortization and reserves, partly limited by decline in fees. Annuity sales improved 29% year over year to $2.3 billion.
Life generated adjusted operating income of $76 million, up 4.1% year over year. The results indicate improved net investment income and reduced DAC amortization. Life sales surged 63% year over year to $13 million.
The Run-off segment incurred adjusted loss of $1.1 billion, which was wider than the prior-year quarter’s adjusted loss of $426 million. The downside was due to dip in underwriting margin, partly mitigated by improved net investment income.
Adjusted operating loss at Corporate & Other was $13 million, which was narrower than loss of $19 million incurred in the year-ago quarter. The lower loss reflects reduced expenses and decline in taxes.
Financial Update
As of Sep 30, 2020, cash and cash equivalents were $6.2 billion, up 44.3% year over year.
Shareholders’ equity of $18.3 billion at third quarter-end increased 3.2% year over year.
Book value per share, excluding accumulated other comprehensive income (AOCI), was $132.55 as of Sep 30, 2020, up 5.6% year over year.
Share Buyback Program
Brighthouse Financial had put its share buyback program on hold on May 11 of this year amid the financial uncertainties induced by the COVID-19 pandemic. On Aug 24, the company came up with the news of recommencing share repurchases. Notably, it bought back shares worth $54 million in the third quarter.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in fresh estimates.
VGM Scores
At this time, Brighthouse Financial has a poor Growth Score of F, however its Momentum Score is doing a lot better with a B. Charting a somewhat similar path, 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 B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Brighthouse Financial has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
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Why Is Brighthouse Financial (BHF) Up 12.9% Since Last Earnings Report?
A month has gone by since the last earnings report for Brighthouse Financial (BHF - Free Report) . Shares have added about 12.9% 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 the most recent earnings report in order to get a better handle on the important catalysts.
Brighthouse Q3 Earnings Beat Estimates, Improve Y/Y
Brighthouse Financial third-quarter 2020 adjusted operating income of $4.19 per share outpaced the Zacks Consensus Estimate by 26.6%. Moreover, the bottom line improved 79.8% year over year.
The quarter witnessed higher annuity and life sales, and improved net investment income, partly offset by lower premiums and elevated expenses.
Behind the Headlines
Operating revenues of $2.2 billion increased 2.8% year over year, primarily due to higher universal life and investment-type product policy fees, net investment income and other revenues, partly offset by lower premiums.
Premiums of $184 million slumped 14% year over year.
Adjusted net investment income was $1 billion in the quarter under review, up 7.9% year over year, due to increased alternative investment income. Net investment income yield came in at 4.42%.
Corporate expenses of $204 million pre-tax decreased 2.9% sequentially.
Total expenses escalated 74.2% year over year to $4.2 billion on higher interest credited to policyholder account balances, rise in policyholder benefits and claims, and increased amortization of DAC and VOBA.
Quarterly Segment Update
Annuities’ adjusted operating income of $387 million soared 90.6% year over year. The results were primarily driven by reduced expenses, and lower deferred acquisition costs ("DAC") amortization and reserves, partly limited by decline in fees. Annuity sales improved 29% year over year to $2.3 billion.
Life generated adjusted operating income of $76 million, up 4.1% year over year. The results indicate improved net investment income and reduced DAC amortization. Life sales surged 63% year over year to $13 million.
The Run-off segment incurred adjusted loss of $1.1 billion, which was wider than the prior-year quarter’s adjusted loss of $426 million. The downside was due to dip in underwriting margin, partly mitigated by improved net investment income.
Adjusted operating loss at Corporate & Other was $13 million, which was narrower than loss of $19 million incurred in the year-ago quarter. The lower loss reflects reduced expenses and decline in taxes.
Financial Update
As of Sep 30, 2020, cash and cash equivalents were $6.2 billion, up 44.3% year over year.
Shareholders’ equity of $18.3 billion at third quarter-end increased 3.2% year over year.
Book value per share, excluding accumulated other comprehensive income (AOCI), was $132.55 as of Sep 30, 2020, up 5.6% year over year.
Share Buyback Program
Brighthouse Financial had put its share buyback program on hold on May 11 of this year amid the financial uncertainties induced by the COVID-19 pandemic. On Aug 24, the company came up with the news of recommencing share repurchases. Notably, it bought back shares worth $54 million in the third quarter.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in fresh estimates.
VGM Scores
At this time, Brighthouse Financial has a poor Growth Score of F, however its Momentum Score is doing a lot better with a B. Charting a somewhat similar path, 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 B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Brighthouse Financial has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.