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Why Prudent Investors are Buying Aflac (AFL) Shares Now
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Aflac Incorporated (AFL - Free Report) is well-poised to grow on the back of higher sales, cost-curbing measures, growing strength in the domestic market and an expanding product suite. The high floating rate income will also continue to aid its investment income.
Outperformer & Zacks Rank
Over the past year, shares of Aflac have gained 18.3%, outperforming the industry’s 13.2% rise. Headquartered in Columbus, GA, AFL operates as a supplemental health and life insurance products provider. It has strong footprints in the United States and Japan. The company has a market cap of $45.5 billion.
Courtesy of solid prospects, this Zacks Rank #2 (Buy) stock is worth adding to your portfolio at the moment.
Let’s delve deeper.
The Zacks Consensus Estimate for AFL’s current-year earnings is pegged at $5.92 per share, which has witnessed six upward estimate revisions in the past 30 days against none in the opposite direction. The estimate indicates 11.1% year-over-year growth. Aflac beat on earnings in all the last four quarters, the average being 7.8%.
The consensus mark for current-year revenues is $18.3 billion. Aflac anticipates improved sales within its Aflac Japan segment this year, buoyed by product launches, product updates and Japan Post performance.
Improving productivity, contributions from platforms like network dental and vision and group life, and disability are likely to drive the U.S. business’ sales going forward. In the last reported quarter, Aflac U.S. sales of $324 million grew 6.4% year over year.
The company’s expense ratio is expected to improve significantly in 2023, dragging the combined ratio down below the year-ago level. Our estimate suggests the combined ratio will stay below 70% in 2023, indicating an improvement from last year’s 74.6%, which will aid its margins. Its costs saving initiatives are expected to drive bottom-line growth. Maintaining a more agile workforce will likely increase AFL’s efficiency over the medium to long term.
Aflac’s balance sheet strength enables the company to take shareholder value boosting measures. It has solid cash and cash equivalents of $4.7 billion as of Jun 30, 2023, and expects debt maturities of $1.3 billion over the next five years. In the first half of this year, it bought back shares worth $1.4 billion. AFL had 95.8 million shares left for buyback as of Jun 30, 2023.
A Risk
However, there is a factor that investors should keep a careful eye on.
Aflac’s net cash from operations declined 15.2% in 2021, 23.2% in 2022 and 38.6% in the first half of 2023. The continuation of this trend can impact future operations. Nevertheless, we believe that a systematic and strategic plan of action will drive growth in the long term.
The consensus mark for Employers Holdings’ current year earnings indicates a 10.2% year-over-year increase. Furthermore, the consensus estimate for EIG’s revenues in 2023 suggests 20.5% year-over-year growth.
The Zacks Consensus Estimate for Trupanion’s current year earnings has improved 9.2% in the past 30 days. Also, the consensus mark for TRUP’s revenues in 2023 suggests 19.2% year-over-year growth.
The Zacks Consensus Estimate for Aegon’s current year earnings has improved 16.7% in the Past 30 days. During this period, AEG has witnessed one upward estimate revision against none in the opposite direction.
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Why Prudent Investors are Buying Aflac (AFL) Shares Now
Aflac Incorporated (AFL - Free Report) is well-poised to grow on the back of higher sales, cost-curbing measures, growing strength in the domestic market and an expanding product suite. The high floating rate income will also continue to aid its investment income.
Outperformer & Zacks Rank
Over the past year, shares of Aflac have gained 18.3%, outperforming the industry’s 13.2% rise. Headquartered in Columbus, GA, AFL operates as a supplemental health and life insurance products provider. It has strong footprints in the United States and Japan. The company has a market cap of $45.5 billion.
Courtesy of solid prospects, this Zacks Rank #2 (Buy) stock is worth adding to your portfolio at the moment.
Let’s delve deeper.
The Zacks Consensus Estimate for AFL’s current-year earnings is pegged at $5.92 per share, which has witnessed six upward estimate revisions in the past 30 days against none in the opposite direction. The estimate indicates 11.1% year-over-year growth. Aflac beat on earnings in all the last four quarters, the average being 7.8%.
Aflac Incorporated Price and EPS Surprise
Aflac Incorporated price-eps-surprise | Aflac Incorporated Quote
The consensus mark for current-year revenues is $18.3 billion. Aflac anticipates improved sales within its Aflac Japan segment this year, buoyed by product launches, product updates and Japan Post performance.
Improving productivity, contributions from platforms like network dental and vision and group life, and disability are likely to drive the U.S. business’ sales going forward. In the last reported quarter, Aflac U.S. sales of $324 million grew 6.4% year over year.
The company’s expense ratio is expected to improve significantly in 2023, dragging the combined ratio down below the year-ago level. Our estimate suggests the combined ratio will stay below 70% in 2023, indicating an improvement from last year’s 74.6%, which will aid its margins. Its costs saving initiatives are expected to drive bottom-line growth. Maintaining a more agile workforce will likely increase AFL’s efficiency over the medium to long term.
Aflac’s balance sheet strength enables the company to take shareholder value boosting measures. It has solid cash and cash equivalents of $4.7 billion as of Jun 30, 2023, and expects debt maturities of $1.3 billion over the next five years. In the first half of this year, it bought back shares worth $1.4 billion. AFL had 95.8 million shares left for buyback as of Jun 30, 2023.
A Risk
However, there is a factor that investors should keep a careful eye on.
Aflac’s net cash from operations declined 15.2% in 2021, 23.2% in 2022 and 38.6% in the first half of 2023. The continuation of this trend can impact future operations. Nevertheless, we believe that a systematic and strategic plan of action will drive growth in the long term.
Other Key Picks
Some other top-ranked stocks in the broader finance space are Employers Holdings, Inc. (EIG - Free Report) , Trupanion, Inc. (TRUP - Free Report) and Aegon N.V. (AEG - Free Report) , each carrying a Zacks Rank #2 at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The consensus mark for Employers Holdings’ current year earnings indicates a 10.2% year-over-year increase. Furthermore, the consensus estimate for EIG’s revenues in 2023 suggests 20.5% year-over-year growth.
The Zacks Consensus Estimate for Trupanion’s current year earnings has improved 9.2% in the past 30 days. Also, the consensus mark for TRUP’s revenues in 2023 suggests 19.2% year-over-year growth.
The Zacks Consensus Estimate for Aegon’s current year earnings has improved 16.7% in the Past 30 days. During this period, AEG has witnessed one upward estimate revision against none in the opposite direction.