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American Equity (AEL) Up 7.3% Since Last Earnings Report: Can It Continue?
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A month has gone by since the last earnings report for American Equity Investment (AEL - Free Report) . Shares have added about 7.3% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is American Equity 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 catalysts.
American Equity Q4 Earnings, Revenues Miss, Down Y/Y
American Equity reported fourth-quarter 2020 adjusted net earnings of 77 cents per share, which missed the Zacks Consensus Estimate by 21.4%. The bottom line decreased 43.8% on a year-over-year basis.
The quarter witnessed lower investment spread income, an increase in other operating costs and expenses as well as increase in the liability for future policy benefits to be paid for lifetime income benefit riders. However, decline in deferred acquisition cost and deferred sales inducement amortization were partial offsets.
Operational Update
Operating total revenues were $521.3 million, down 11.3% year over year. The top line missed the Zacks Consensus Estimate by 2.4%.
Premiums and other considerations increased 16.2% year over year. Annuity product charges increased 4.2% while net investment income declined 11.3%, all on a year-over-year basis.
Gross annuity sales of $1.8 billion doubled year over year. Sequentially, annuity sales were driven by increased gross annuity sales at Eagle Life (up 630%) and American Equity Life (up 103%).
Total benefits were $1 billion, up 22.4% year over year.
Investment spread was 2.25%, down from 2.77% in the year-ago quarter.
Policyholder funds under management of $54.1 billion at quarter end were up 2% from third- quarter end.
Full-Year Highlights
Adjusted net earnings of 75 cents per share missed the Zacks Consensus Estimate of 97 cents. The bottom line dropped from the year-ago earnings of $5.97 per share.
Operating total revenues were $2.5 billion, down 3.8% year over year. The top line beat the Zacks Consensus Estimate of $2.2 billion.
Financial Update
Cash and cash equivalents were $9.1 billion as on Dec 31, 2020, compared with $2.3 billion as on Dec 31, 2019. Total investments were about $53.6 billion, down from $56.9 billion at 2019 end.
Note payable totaled $495.7 million, slightly up from $495.1 million at 2019 end.
Book value per common share excluding AOCI was $35.99, up 22.7% from 2019 end.
Total debt/total capitalization was 12.2% at 2020 end, improving 550 basis points.
Operating return on equity excluding average AOCI was 2.3%.
Estimated risk-based capital ratio was 372%, excluding approximately $300 million of excess cash at the holding company.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates revision. The consensus estimate has shifted -24.44% due to these changes.
VGM Scores
At this time, American Equity has an average Growth Score of C, however its Momentum Score is doing a bit 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 A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise American Equity has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.
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American Equity (AEL) Up 7.3% Since Last Earnings Report: Can It Continue?
A month has gone by since the last earnings report for American Equity Investment (AEL - Free Report) . Shares have added about 7.3% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is American Equity 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 catalysts.
American Equity Q4 Earnings, Revenues Miss, Down Y/Y
American Equity reported fourth-quarter 2020 adjusted net earnings of 77 cents per share, which missed the Zacks Consensus Estimate by 21.4%. The bottom line decreased 43.8% on a year-over-year basis.
The quarter witnessed lower investment spread income, an increase in other operating costs and expenses as well as increase in the liability for future policy benefits to be paid for lifetime income benefit riders. However, decline in deferred acquisition cost and deferred sales inducement amortization were partial offsets.
Operational Update
Operating total revenues were $521.3 million, down 11.3% year over year. The top line missed the Zacks Consensus Estimate by 2.4%.
Premiums and other considerations increased 16.2% year over year. Annuity product charges increased 4.2% while net investment income declined 11.3%, all on a year-over-year basis.
Gross annuity sales of $1.8 billion doubled year over year. Sequentially, annuity sales were driven by increased gross annuity sales at Eagle Life (up 630%) and American Equity Life (up 103%).
Total benefits were $1 billion, up 22.4% year over year.
Investment spread was 2.25%, down from 2.77% in the year-ago quarter.
Policyholder funds under management of $54.1 billion at quarter end were up 2% from third- quarter end.
Full-Year Highlights
Adjusted net earnings of 75 cents per share missed the Zacks Consensus Estimate of 97 cents. The bottom line dropped from the year-ago earnings of $5.97 per share.
Operating total revenues were $2.5 billion, down 3.8% year over year. The top line beat the Zacks Consensus Estimate of $2.2 billion.
Financial Update
Cash and cash equivalents were $9.1 billion as on Dec 31, 2020, compared with $2.3 billion as on Dec 31, 2019. Total investments were about $53.6 billion, down from $56.9 billion at 2019 end.
Note payable totaled $495.7 million, slightly up from $495.1 million at 2019 end.
Book value per common share excluding AOCI was $35.99, up 22.7% from 2019 end.
Total debt/total capitalization was 12.2% at 2020 end, improving 550 basis points.
Operating return on equity excluding average AOCI was 2.3%.
Estimated risk-based capital ratio was 372%, excluding approximately $300 million of excess cash at the holding company.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates revision. The consensus estimate has shifted -24.44% due to these changes.
VGM Scores
At this time, American Equity has an average Growth Score of C, however its Momentum Score is doing a bit 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 A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise American Equity has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.