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Voya (VOYA) Down 1.3% Since Last Earnings Report: Can It Rebound?
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It has been about a month since the last earnings report for Voya Financial (VOYA - Free Report) . Shares have lost about 1.3% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Voya due for a breakout? 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.
Voya Financial Q3 Earnings Beat Estimates, Fall Y/Y
Voya Financial reported third-quarter 2022 adjusted operating earnings of $2.30 per share, which surpassed the Zacks Consensus Estimate by 84%. The bottom line however decreased 10.5% year over year.
Voya Financial’s results reflected lower alternative investment income. In Investment Management, lower investment capital revenues were partially offset by higher underwriting results in Health Solutions and a favorable change in DAC/VOBA and other intangibles unlocking in Wealth Solutions.
Behind the Headlines
Total revenues amounted to $1.3 billion, which decreased 33.4% year over year. Net investment income declined 22.4% year over year to $522 million. Meanwhile, fee income of $435 million decreased 10.7% year over year. Premiums totaled $607 million, up 11.6% from the year-ago quarter. Total expenses were $1.2 billion, down 10% from the year-ago quarter. As of Sep 30, 2022, VOYA’s assets under management and assets under administration & advisement totaled $710.9 billion.
Segmental Update
Wealth Solutions reported adjusted operating earnings of $168 million, which decreased 47.3% 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 $555 million in the reported quarter, up 56.3% year over year.
Health Solutions’ adjusted operating earnings amounted to $149 million, which increased 109.9% year over year in the third quarter, accounting for the higher underwriting results, partially offset by lower overall investment income and higher net expenses. Total annualized in-force premiums were $2.8 billion, up 9.7% year over year. The increase reflects growth across all product lines, including a 22% increase in Voluntary.
Investment Management posted adjusted operating earnings of $38 million, which plunged 39.7% year over year, attributable to lower investment capital revenues and higher administrative expenses. Total assets under management were $317.3 billion as of Sep 30, 2022, up 25.6% year over year. Institutional net outflows for the quarter were $889 million.
Corporate incurred an adjusted operating loss of $56 million, narrower than the prior-year quarter’s loss of $65 million, attributable to lower incentive compensation and lower interest expense due to debt extinguishments.
Financial Update
Voya Financial exited the third quarter with cash and cash equivalents of $840 million, which decreased 40.1% year over year. Total investments amounted to $39.5 billion, down 13.3% year over year.
Long-term debt at third-quarter end declined 19.3% year over year to $2.1 billion. The financial leverage ratio deteriorated 980 basis points (bps) year over year to 37.4%. As of Sep 30, 2022, book value per share (excluding AOCI) was $56.24, which increased 9.4% year over year. Voya Financial exited the third quarter with about $700 million in excess capital.
Voya had 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 was received in the third quarter of 2022. VOYA had $271 million remaining under its share repurchase authorization as of Sep 30, 2022.
Acquisitions
On Nov 1, 2022, Voya inked a definitive agreement to acquire Benefitfocus, Inc. Pending approval, the transaction will close in the first quarter of 2023. The transaction is expected to ramp up Voya’s workplace-centered strategy and increase capacity to meet the growing demand for comprehensive benefits and savings solutions at the workplace. The transaction is expected to be immediately accretive, on a cash basis, to Voya’s adjusted operating earnings per share.
Voya Financial also closed the Czech Asset Management, L.P. buyout on Nov. 1. Czech Asset is a leading private credit asset manager dedicated to the U.S. middle market. The addition supports VOYA’s focus on the expansion of its private and alternative capabilities, which is a key growth initiative in Investment Management.
Guidance
Banking on organic growth, margin expansion and capital management initiatives, VOYA is on track to achieve 12% to 17% adjusted operating earnings per share growth in 2022.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended downward during the past month.
The consensus estimate has shifted -9.74% due to these changes.
VGM Scores
Currently, Voya has a subpar Growth Score of D, however its Momentum Score is doing a bit better with a C. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. 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. Notably, Voya has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Voya (VOYA) Down 1.3% Since Last Earnings Report: Can It Rebound?
It has been about a month since the last earnings report for Voya Financial (VOYA - Free Report) . Shares have lost about 1.3% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Voya due for a breakout? 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.
Voya Financial Q3 Earnings Beat Estimates, Fall Y/Y
Voya Financial reported third-quarter 2022 adjusted operating earnings of $2.30 per share, which surpassed the Zacks Consensus Estimate by 84%. The bottom line however decreased 10.5% year over year.
Voya Financial’s results reflected lower alternative investment income. In Investment Management, lower investment capital revenues were partially offset by higher underwriting results in Health Solutions and a favorable change in DAC/VOBA and other intangibles unlocking in Wealth Solutions.
Behind the Headlines
Total revenues amounted to $1.3 billion, which decreased 33.4% year over year. Net investment income declined 22.4% year over year to $522 million. Meanwhile, fee income of $435 million decreased 10.7% year over year. Premiums totaled $607 million, up 11.6% from the year-ago quarter. Total expenses were $1.2 billion, down 10% from the year-ago quarter. As of Sep 30, 2022, VOYA’s assets under management and assets under administration & advisement totaled $710.9 billion.
Segmental Update
Wealth Solutions reported adjusted operating earnings of $168 million, which decreased 47.3% 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 $555 million in the reported quarter, up 56.3% year over year.
Health Solutions’ adjusted operating earnings amounted to $149 million, which increased 109.9% year over year in the third quarter, accounting for the higher underwriting results, partially offset by lower overall investment income and higher net expenses. Total annualized in-force premiums were $2.8 billion, up 9.7% year over year. The increase reflects growth across all product lines, including a 22% increase in Voluntary.
Investment Management posted adjusted operating earnings of $38 million, which plunged 39.7% year over year, attributable to lower investment capital revenues and higher administrative expenses. Total assets under management were $317.3 billion as of Sep 30, 2022, up 25.6% year over year. Institutional net outflows for the quarter were $889 million.
Corporate incurred an adjusted operating loss of $56 million, narrower than the prior-year quarter’s loss of $65 million, attributable to lower incentive compensation and lower interest expense due to debt extinguishments.
Financial Update
Voya Financial exited the third quarter with cash and cash equivalents of $840 million, which decreased 40.1% year over year. Total investments amounted to $39.5 billion, down 13.3% year over year.
Long-term debt at third-quarter end declined 19.3% year over year to $2.1 billion. The financial leverage ratio deteriorated 980 basis points (bps) year over year to 37.4%. As of Sep 30, 2022, book value per share (excluding AOCI) was $56.24, which increased 9.4% year over year. Voya Financial exited the third quarter with about $700 million in excess capital.
Voya had 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 was received in the third quarter of 2022. VOYA had $271 million remaining under its share repurchase authorization as of Sep 30, 2022.
Acquisitions
On Nov 1, 2022, Voya inked a definitive agreement to acquire Benefitfocus, Inc. Pending approval, the transaction will close in the first quarter of 2023. The transaction is expected to ramp up Voya’s workplace-centered strategy and increase capacity to meet the growing demand for comprehensive benefits and savings solutions at the workplace. The transaction is expected to be immediately accretive, on a cash basis, to Voya’s adjusted operating earnings per share.
Voya Financial also closed the Czech Asset Management, L.P. buyout on Nov. 1. Czech Asset is a leading private credit asset manager dedicated to the U.S. middle market. The addition supports VOYA’s focus on the expansion of its private and alternative capabilities, which is a key growth initiative in Investment Management.
Guidance
Banking on organic growth, margin expansion and capital management initiatives, VOYA is on track to achieve 12% to 17% adjusted operating earnings per share growth in 2022.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended downward during the past month.
The consensus estimate has shifted -9.74% due to these changes.
VGM Scores
Currently, Voya has a subpar Growth Score of D, however its Momentum Score is doing a bit better with a C. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. 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. Notably, Voya has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.