Back to top

Image: Bigstock

Brighthouse (BHF) Stock Up 90.6% in a Year: More Room to Run?

Read MoreHide Full Article

Shares of Brighthouse Financial, Inc. (BHF - Free Report) have gained 90.6% in a year compared with the industry's increase of 33.5%. The Zacks S&P 500 composite rallied 46.3% in the said time frame. With a market capitalization of $3.9 billion, average volume of shares traded in the last three months was 0.8 million.

In the past 30 days, the company’s 2022 earnings estimates have moved up 0.2%, reflecting analyst’s optimism surrounding the stock.

The Zacks Consensus Estimate for 2021 and 2022 earnings per share is pegged at $11.62 and $13.20, indicating year-over-year increase of nearly 200.3% and 13.6%, respectively.

Can It Retain the Momentum?

Brighthouse is well poised for growth on the back of solid operations at Annuities and Life segments. Higher premiums, other revenues, well-diversified and high-quality portfolio as well as conservative investment strategy will continue to boost the company’s top line.

The life insurer also focuses on making necessary investments in technology infrastructure and in business referred to as establishment costs. The company expects establishment costs of $150 million over the next two years as it continues the transition to future state operations and technology platform.

Continued strong sales are likely to drive the total annuity net inflows of Brighthouse Financial. Further, the company expects to witness a continued shift in business mix profile over time as it adds more cash flow generating and less capital-intensive new business, coupled with the runoff of less profitable business.

The insurer is focused on adding high-quality new business to enhance business mix. Also, fixed rate annuities continue to benefit sales. In 2021, the company expects growth in shield and variable annuities.

Considering the uncertain environment, Brighthouse estimated combined risk-based capital or RBC ratio at approximately 485%, which is well above its target range of 400-450% in normal market conditions.

The Zacks Rank #3 (Hold) insurer boasts solid balance sheet and liquidity positions and has the right strategy to deliver long-term shareholder value. It has maintained a substantial short-term liquidity position of $4.5 billion by the end of 2020, up 61% year over year.

Banking on its robust capital position, the insurer is committed toward enhancing shareholders’ value. In the first quarter of 2021, repurchase of up to an additional $200 million of our common stock has been authorized. Currently, it has $80 million remaining under its share repurchase authorization. It will continue to focus on completing its target of returning $1.5 billion to shareholders by the end of 2021.

Stocks to Consider

Investors interested in the insurance industry may look at Sun Life Financial Inc (SLF - Free Report) , Fidelity National Financial (FNF - Free Report) and Cincinnati Financial (CINF - Free Report) , each carrying a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Sun Life has a trailing four-quarter earnings surprise of 18.19%, on average.

Fidelity National’s has a trailing four-quarter earnings surprise of 41.36%, on average.

Cincinnati Financial surpassed earnings estimates in two of the last four quarters. It has a trailing four-quarter earnings surprise of 4.10%, on average.

5G Revolution: 3 Stocks to Make Your Move

With super high data speed, it will make current cell phones obsolete and unlock the full potential of big data, cloud computing, and artificial intelligence. In the next few years this industry is predicted to create 22 million jobs and a stunning $12.3 trillion in revenue.

Today you have an historic chance to pursue almost unimaginable gains like Microsoft, Netflix, and Apple in their early phases. Zacks has released a Special Report that reveals our . . .

  •  Smartest stock for 5G telecom
  •  Safest investment in 5G hardware
  • Single best 5G buy of all!

Download now. Today the report is FREE >>

Published in