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Brighthouse (BHF) Up 37.6% in a Year: More Room for Growth?
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Shares of Brighthouse Financial, Inc. (BHF - Free Report) have gained 37.6% in a year against the industry's decrease of 3.1%. The Zacks S&P 500 composite has rallied 14.5% in the said time frame. With a market capitalization of $4.3 billion, the average volume of shares traded in the last three months was 0.7 million.
Image Source: Zacks Investment Research
The rally was largely driven by strong sales, cost-saving initiatives, sufficient liquidity and effective capital deployment.
The life insurer has a decent earnings surprise history. The bottom line beat estimates in each of the last four quarters, the average being 77.2%.
Will the Bull Run Continue?
Estimates for 2022 and 2023 have moved up nearly 3.9% and 3.5% in the past 60 days, reflecting investors’ optimism.
The Zacks Consensus Estimate for 2023 earnings per share is pegged at $15.8, indicating a year-over-year increase of nearly 9.5%.
Brighthouse remains well poised for growth, with solid performances by the Annuities, Life and Run-off segments. In 2021, the life insurer witnessed solid sales of both annuities and life insurance. BHF delivered record sales for both Shield Level annuities and variable annuities with FlexChoice Access. Continued sales growth across annuities and life insurance is expected in 2022.
Riding on higher alternative investment return, Brighthouse’s adjusted net investment income is expected to improve. For 2021, the alternative investment return was 42.6%, which exceeded the projected 9% to 11% annual return.
The insurer’s trailing 12-month return on equity (ROE) was 11.7%, which expanded 650 basis points year over year. ROE reflects its efficiency in using its shareholders’ funds.
For expense management, the life insurer reduced corporate expenses, which are likely to lower the expense ratio.
The insurer’s business mix continues to progress by adding more high-quality new business. BHF expects a continued shift in business mix profile with the addition of higher cash flow generation and less capital-intensive business, along with the runoff of less profitable business.
The life insurer had a solid balance sheet and ended the year 2021 with an estimated combined risk-based capital or RBC ratio of nearly 500%, well above the target range of 400% to 450% in normal markets. BHF ended the year with liquid assets worth $1.6 billion at its holding company.
Banking on solid cash flow, the insurer remains committed to enhancing its shareholder value and supporting the repurchase strategy.
Brighthouse currently carries a Zacks Rank #2 (Buy) and has an impressive Value Score of A. The stock remains undervalued at the current level. BHF currently has a trailing 12-month price-to-book value ratio of 0.27, lower than the industry average of 1.26.
Back-tested results show that stocks with a Value Score of A or B, when combined with a Zacks Rank #1 (Strong Buy) or 2, offer the best opportunities in the value investing space.
Arch Capital’s earnings surpassed estimates in each of the last four quarters, the average beat being 35.84%. In the past year, ACGL has rallied 33.9%.
The Zacks Consensus Estimate for 2022 and 2023 earnings has moved 0.8% and 2.2% north, respectively, in the past seven days. Arch Capital’s expected long-term earnings growth rate is pegged at 10%.
W.R. Berkley’s earnings surpassed estimates in each of the last four quarters, the average earnings surprise being 27.53%. In the past year, WRB has rallied 32.2%.
The Zacks Consensus Estimate for 2022 and 2023 earnings has moved 4.7% and 1.7% north, respectively, in the past 30 days. W.R. Berkley’s expected long-term earnings growth rate is pegged at 9%.
The bottom line of American Financial surpassed earnings estimates in each of the last four quarters, the average being 39.58%. In the past year, the insurer has rallied 26.2%.
The Zacks Consensus Estimate for American Financial’s 2022 and 2023 earnings has moved 3.3% and 8.2% north, respectively, in the past seven days.
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Brighthouse (BHF) Up 37.6% in a Year: More Room for Growth?
Shares of Brighthouse Financial, Inc. (BHF - Free Report) have gained 37.6% in a year against the industry's decrease of 3.1%. The Zacks S&P 500 composite has rallied 14.5% in the said time frame. With a market capitalization of $4.3 billion, the average volume of shares traded in the last three months was 0.7 million.
Image Source: Zacks Investment Research
The rally was largely driven by strong sales, cost-saving initiatives, sufficient liquidity and effective capital deployment.
The life insurer has a decent earnings surprise history. The bottom line beat estimates in each of the last four quarters, the average being 77.2%.
Will the Bull Run Continue?
Estimates for 2022 and 2023 have moved up nearly 3.9% and 3.5% in the past 60 days, reflecting investors’ optimism.
The Zacks Consensus Estimate for 2023 earnings per share is pegged at $15.8, indicating a year-over-year increase of nearly 9.5%.
Brighthouse remains well poised for growth, with solid performances by the Annuities, Life and Run-off segments. In 2021, the life insurer witnessed solid sales of both annuities and life insurance. BHF delivered record sales for both Shield Level annuities and variable annuities with FlexChoice Access. Continued sales growth across annuities and life insurance is expected in 2022.
Riding on higher alternative investment return, Brighthouse’s adjusted net investment income is expected to improve. For 2021, the alternative investment return was 42.6%, which exceeded the projected 9% to 11% annual return.
The insurer’s trailing 12-month return on equity (ROE) was 11.7%, which expanded 650 basis points year over year. ROE reflects its efficiency in using its shareholders’ funds.
For expense management, the life insurer reduced corporate expenses, which are likely to lower the expense ratio.
The insurer’s business mix continues to progress by adding more high-quality new business. BHF expects a continued shift in business mix profile with the addition of higher cash flow generation and less capital-intensive business, along with the runoff of less profitable business.
The life insurer had a solid balance sheet and ended the year 2021 with an estimated combined risk-based capital or RBC ratio of nearly 500%, well above the target range of 400% to 450% in normal markets. BHF ended the year with liquid assets worth $1.6 billion at its holding company.
Banking on solid cash flow, the insurer remains committed to enhancing its shareholder value and supporting the repurchase strategy.
Brighthouse currently carries a Zacks Rank #2 (Buy) and has an impressive Value Score of A. The stock remains undervalued at the current level. BHF currently has a trailing 12-month price-to-book value ratio of 0.27, lower than the industry average of 1.26.
Back-tested results show that stocks with a Value Score of A or B, when combined with a Zacks Rank #1 (Strong Buy) or 2, offer the best opportunities in the value investing space.
Other Stocks to Consider
Some other top-ranked insurers include Arch Capital Group (ACGL - Free Report) , W.R. Berkley (WRB - Free Report) and American Financial Group (AFG - Free Report) . While Arch Capital and W.R. Berkley sport a Zacks Rank #1, American Financial carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Arch Capital’s earnings surpassed estimates in each of the last four quarters, the average beat being 35.84%. In the past year, ACGL has rallied 33.9%.
The Zacks Consensus Estimate for 2022 and 2023 earnings has moved 0.8% and 2.2% north, respectively, in the past seven days. Arch Capital’s expected long-term earnings growth rate is pegged at 10%.
W.R. Berkley’s earnings surpassed estimates in each of the last four quarters, the average earnings surprise being 27.53%. In the past year, WRB has rallied 32.2%.
The Zacks Consensus Estimate for 2022 and 2023 earnings has moved 4.7% and 1.7% north, respectively, in the past 30 days. W.R. Berkley’s expected long-term earnings growth rate is pegged at 9%.
The bottom line of American Financial surpassed earnings estimates in each of the last four quarters, the average being 39.58%. In the past year, the insurer has rallied 26.2%.
The Zacks Consensus Estimate for American Financial’s 2022 and 2023 earnings has moved 3.3% and 8.2% north, respectively, in the past seven days.