It has been about a month since the last earnings report for Voya Financial (
VOYA Quick Quote VOYA - Free Report) . Shares have added about 0.7% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Voya 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.
Voya Financial Q2 Earnings Beat, Revenues Fall Y/Y Voya Financial reported second-quarter 2022 adjusted operating earnings of $1.67 per share, which surpassed the Zacks Consensus Estimate by 20.1%. The bottom line decreased 24.1% year over year. Voya Financial’s results reflected lower investment income, higher non-COVID claims in Group Life and higher loss ratios in Stop Loss and Voluntary, lower fee-based margin, unfavorable change in DAC/VOBA and other intangibles unlocking. It was offset by higher premiums and lower administrative expenses. Behind the Headlines
Total revenues amounted to $1.5 billion, which decreased 39.3% year over year. Net investment income declined 11.4% year over year to $581 million. Meanwhile, fee income of $411 million decreased 5.7% year over year. Premiums totaled $595 million increased 15.3% from the year-ago quarter.
Total expenses were $1.4 billion, down 7.4% from the year-ago quarter. As of Jun 30, 2022, VOYA’s assets under management and assets under administration & advisement totaled $644.4 billion. Segmental Update Wealth Solutions reported adjusted operating earnings of $186 million, which decreased 36.9% year over year. The downside was due to lower investment income, lower fee-based margin, unfavorable change in DAC/VOBA and other intangibles unlocking, partially offset by lower administrative expenses. Wealth Solutions however generated positive Full Service net flows of $1 billion in the reported quarter. Health Solutions’ adjusted operating earnings amounted to $47 million, which decreased 25.4% year over year in the second quarter accounting for a lower investment income, higher net expenses, higher non-COVID claims in Group Life and higher loss ratios in Stop Loss and Voluntary. Total annualized in-force premiums were $2.7 billion, up 9.3% year over year. The increase reflects growth across all product lines, including a 24% increase in Voluntary. Investment Management posted adjusted operating earnings of $40 million, which plunged 39.4% year over year attributable to lower investment capital revenues and higher administrative expenses. Total assets under management were $236 billion as of Jun 30, 2022, down 7% year over year. Institutional net flows for the quarter were $2 billion. Corporate incurred adjusted operating losses of $49 million, narrower than the prior-year quarter’s loss of $71 million, attributable to lower incentive compensation, lower interest expense due to debt extinguishments and lower net stranded costs associated with the Individual Life transaction. Financial Update
Voya Financial exited the second quarter with cash and cash equivalents of $954 million, which decreased 45.9% year over year. Total investments amounted to $40.9 billion, down 11% year over year.
Long-term debt at second-quarter end declined 19.6% year over year to $2.4 billion. The financial leverage ratio deteriorated 670 basis points (bps) year over year to 36.9%. As of Jun 30, 2022, book value per share (excluding AOCI) was $49.71, which increased 6% year over year. Voya Financial exited the second quarter with roughly $700 million in excess capital, including about $100 million generated in the second quarter. Capital Deployment
Voya entered into an accelerated share repurchase (ASR) agreement to repurchase $250 million worth shares — $200 million of which were delivered during the second quarter, the remaining $50 million will be delivered in the third quarter of 2022.
Also, in the second quarter, Voya received nearly $55 million worth of shares related to an ASR agreement that was entered into with a third party in the first quarter of 2022. Accounting for the earlier mentioned $250 million ASR that Voya entered into the second quarter, VOYA had nearly $271 million remaining under its share repurchase authorization. On Jul 28, 2022, the board of directors at VOYA approved a third-quarter 2022 common stock dividend of 20 cents per share, which seems to be in line with the company’s endeavor of maintaining its dividend yield above 1%. How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended downward during the past month.
The consensus estimate has shifted -5.03% due to these changes.
Currently, Voya has a subpar Growth Score of D, a grade with the same score on the momentum front. However, 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.
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Voya has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.