It has been about a month since the last earnings report for Aflac (AFL Quick QuoteAFL - Free Report) . Shares have added about 4.8% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Aflac 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.

Aflac's Q1 Earnings and Revenues Surpass Estimates

Aflac’s first-quarter 2021 adjusted earnings per share of $1.53, which outpaced the Zacks Consensus Estimate by 27.5%. Further, the bottom line grew 26.4% year over year.

The company’s results gained momentum from higher revenues and the favorable effect of share repurchases.

Moreover, total revenues of $5.9 billion surpassed the Zacks Consensus Estimate by 4.35%. The top line also improved 13.7% year over year.
Annualized adjusted return on equity excluding foreign currency impact, was 17%, which improved 120 basis points (bps) from the prior-year quarter.

Further, total acquisition and operating expenses were up 1.9% year over year to $1.5 billion.

Favorable Results at Aflac Japan

Total revenues were up 1% year over year to $3.8 billion owing to a 9.8% rise in net investment income, partly offset by a 0.9% decline in premiums. Constrained sales from the impact of pandemic conditions and limited-pay products reaching paid-up status weighed on premium growth. Pre-tax adjusted earnings improved 3.7% from the prior-year quarter to $887 million.

Weak Performance at Aflac U.S.

Total revenues fell 3.5% year over year to $1.6 billion due to lower premiums on account of decline in sales activity. Net premium income slipped 4.1% year over year to $1.4 billion. Adjusted net investment income of $176 million slid 0.6% from the prior-year quarter.

Pre-tax adjusted earnings from the U.S. segment were $445 million, up 36.5% year over year, primarily on lower incurred claim.

Share Repurchase & Dividend Update

Aflac bought back 13.4 million shares worth $650 million during the first quarter. The company had 85.7 million shares remaining under its buyback program as of Mar 31, 2021.

Solid Financial Position (as of Mar 31, 2021)

Total investments and cash were $143.3 billion, up 4.6% from the 2020-end level.
Total assets were $158.2 billion, up 4.3% from the 2020-end level. Shareholders' equity (excluding AOCI) was $32.1 billion, up 21.6% from the level at 2020 end.

Outlook for the First Half of 2021

Although the COVID-19 pandemic is likely to put pressure on sales activity across both the United States and Japan during the first half of 2021, the company anticipates some decent sales figures in the latter half of the year.

The company estimates sales in Japan to improve in the second half of the year as its largest agent in the region, Japan Post Group, resumed proactive sales in April.


 

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in estimates revision.

VGM Scores

Currently, Aflac has a nice Growth Score of B, however its Momentum Score is doing a bit better with an A. Following the exact same course, 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 trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Aflac has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.