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Reasons Why Brighthouse Financial (BHF) is a Solid Pick Now

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Brighthouse Financial, Inc. (BHF - Free Report) is well-poised for growth, driven by higher net investment income, a higher underwriting margin, sufficient liquidity and prudent capital deployment.

Estimate Revision

The Zacks Consensus Estimate for Brighthouse’s 2022 and 2023 earnings has moved 17.3% and 3.6% north, respectively, in the past 30 days. This should instill investors' confidence in the stock.

Earnings Surprise History

Brighthouse has a solid track record of beating earnings estimates in each of the last seven quarters.

Zacks Rank & Price Performance

Brighthouse currently carries a Zacks Rank #2 (Buy). In the past year, the stock has lost 5.7% compared with the industry’s decrease of 21.4%.

Zacks Investment Research
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Return on Equity (ROE)

Brighthouse’s ROE for the trailing 12 months is 11.5%, expanding 220 basis points year over year. ROE reflects the insurer’s efficiency in using shareholders’ funds.

Business Tailwinds

Brighthouse remains well poised for growth, with solid performances by the Annuities, Life and Run-off segments.

Riding on fixed deferred annuities and Shield Level Annuities, total annuity sales are likely to increase.

Brighthouse remained focused on enhancing the product portfolio with the launch of Shield Level Pay Plus. The product is designed to strengthen clients' retirement portfolios by providing a stream of guaranteed lifetime income. It will also offer them opportunities to participate in market growth combined with a level of protection against market volatility.

The Run-off segment is likely to gain on the back of higher net investment income and a higher underwriting margin.

Riding on higher alternative investment income, a well-diversified and high-quality portfolio as well as a conservative investment strategy, Brighthouse’s adjusted net investment income is expected to improve.

Brighthouse’s capitalization remained strong, with an estimated combined risk-based capital or RBC ratio between 470% and 490%. BHF continues to target an RBC ratio between 400% and 450% in normal markets.

A solid statutory balance sheet and sufficient cash continue to support the repurchase strategy. Currently, it has $522 million remaining under its share repurchase authorization.

Brighthouse 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 0.31, lower than the industry average of 1.05.

Other Stocks to Consider

Some other top-ranked stocks from the insurance industry are Reinsurance Group of America, Incorporated (RGA - Free Report) , American Financial Group, Inc. (AFG - Free Report) and Voya Financial, Inc. (VOYA - Free Report) . While Reinsurance Group and American Financial Group sport a Zacks Rank #1 (Strong Buy), Voya Financial carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Reinsurance Group’s 2022 and 2023 earnings has moved 8.6% and 0.4% north, respectively, in the past 30 days. In the past year, Reinsurance Group stock has gained 9.9%.

The Zacks Consensus Estimate for RGA’s 2022 and 2023 earnings per share indicates a year-over-year increase of 1,057.5% and 20.4%, respectively.

American Financial’s earnings surpassed estimates in each of the last four quarters, the average beat being 37.09%. In the past year, American Financial has lost 5.6%.

The Zacks Consensus Estimate for AFG’s 2022 and 2023 earnings has moved 4.1% and 4.3% north, respectively, in the past 60 days.

Voya Financial’s earnings surpassed estimates in three of the last four quarters while missing in one, the average earnings surprise being 10.81%. In the past year, Voya Financial’s stock has lost 2.4%.

The Zacks Consensus Estimate for VOYA’s 2022 and 2023 earnings has moved 3.3% and 0.6% north, respectively, in the past 30 days.

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