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Can Aflac's (AFL) Q3 Earnings Beat on Lower Benefits & Expenses?
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Aflac Incorporated (AFL - Free Report) is scheduled to release third-quarter 2023 results on Nov 1, after market close.
Q3 Estimates
The Zacks Consensus Estimate for Aflac’s third-quarter earnings per share (EPS) is pegged at $1.44, which implies growth of 17.1% from the prior-year quarter’s reported figure.
The consensus mark for revenues is pegged at $4.5 billion, suggesting a 7.4% fall from the year-ago quarter’s reported number.
Aflac boasts an impressive earnings surprise history. Its bottom line beat estimates in each of the trailing four quarters, the average surprise being 7.8%. This is depicted in the chart below:
Our proven model predicts an earnings beat for Aflac this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat, which is the case here.
Earnings ESP: Aflac has an Earnings ESP of +0.62% because the Most Accurate Estimate of $1.45 is pegged higher than the Zacks Consensus Estimate of $1.44. You can uncover the best stocks before they’re reported with our Earnings ESP Filter.
Zacks Rank: AFL presently carries a Zacks Rank of 2.
Before we get into what to expect for the to-be-reported quarter in detail, it’s worth taking a look at AFL’s previous-quarter performance first.
Q2 Earnings Rewind
In the last reported quarter, the company reported adjusted EPS of $1.58, which beat the Zacks Consensus Estimate by 11.3%. The strong second-quarter earnings were supported by higher sales, reduced benefits and claims, and improved profit levels from U.S. businesses. However, the positives were partially offset by lower net investment income and tepid performance in the Japan unit.
Now, let’s see how things have shaped up prior to the third-quarter earnings announcement.
Factors to Note
In the third quarter, the results of Aflac Japan are likely to have received an impetus from the launch of an enhanced cancer insurance product, thereby leading to increased persistency rates and higher sales. An improved expense ratio is expected to have contributed to the segment’s results. However, limited pay products attaining paid-up status and the execution of a global reinsurance strategy are likely to have been roadblocks for AFL’s Japan unit in the to-be-reported quarter. We expect adjusted revenues of Aflac Japan to be $2,409 million in the third quarter, which hints toward a year-over-year decline of 13.8%.
The prospects of Aflac U.S. are expected to have gained from improved adjusted net investment income, which, in turn, is likely to have stemmed from expanding floating rate income. Additionally, strong dental and vision sales, new product launches and tie-ups are expected to have driven the unit’s quarterly results.
Our estimate for adjusted net investment income in the segment stands at $270.9 million in the to-be-reported quarter, suggesting 27.8% growth year over year. We anticipate adjusted revenues of $1,631.7 million in Aflac U.S., which indicates a 1.6% rise year over year.
Multiple cost-curbing initiatives are likely to have provided some respite to Aflac’s margins in the third quarter. The company continues to undertake investments to upgrade core technology platforms or digital capabilities to save costs, bring about automation in processes and boost operational efficiencies. Our estimate for total acquisition and other operating expenses stands at $1,146.5 million, which implies a decline of 11.7% year over year. Our estimate for total benefits and expenses suggests an 8.3% year-over-year decrease.
Other Stocks to Consider
Here are some other companies from the insurance space, which according to our model, also have the right combination of elements to beat on earnings this time around:
The Zacks Consensus Estimate for AIG’s third-quarter 2023 EPS is pegged at $1.55, which has more than doubled from the prior-year quarter’s reported figure.
American International’s earnings beat estimates in each of the trailing four quarters, the average surprise being 13.5%.
Enact Holdings, Inc. (ACT - Free Report) has an Earnings ESP of +2.33% and a Zacks Rank of 2 at present. The Zacks Consensus Estimate for ACT’s third-quarter 2023 EPS is pegged at $0.86, which indicates a decline of 26.5% from the prior-year quarter’s reported figure.
Enact Holdings’ earnings beat estimates in three of the trailing four quarters, missed once, the average surprise being 25%.
American Equity Investment Life Holding Company (AEL - Free Report) currently has an Earnings ESP of +1.44% and a Zacks Rank of 3.
The Zacks Consensus Estimate for AEL’s third-quarter 2023 EPS is pegged at $1.67, suggesting a 68.7% surge from the prior-year quarter’s reported number.
American Equity's earnings beat estimates in two of the trailing four quarters and missed twice, the average surprise being 6.5%.
Image: Bigstock
Can Aflac's (AFL) Q3 Earnings Beat on Lower Benefits & Expenses?
Aflac Incorporated (AFL - Free Report) is scheduled to release third-quarter 2023 results on Nov 1, after market close.
Q3 Estimates
The Zacks Consensus Estimate for Aflac’s third-quarter earnings per share (EPS) is pegged at $1.44, which implies growth of 17.1% from the prior-year quarter’s reported figure.
The consensus mark for revenues is pegged at $4.5 billion, suggesting a 7.4% fall from the year-ago quarter’s reported number.
Aflac boasts an impressive earnings surprise history. Its bottom line beat estimates in each of the trailing four quarters, the average surprise being 7.8%. This is depicted in the chart below:
Aflac Incorporated Price and EPS Surprise
Aflac Incorporated price-eps-surprise | Aflac Incorporated Quote
What Our Quantitative Model Unveils
Our proven model predicts an earnings beat for Aflac this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat, which is the case here.
Earnings ESP: Aflac has an Earnings ESP of +0.62% because the Most Accurate Estimate of $1.45 is pegged higher than the Zacks Consensus Estimate of $1.44. You can uncover the best stocks before they’re reported with our Earnings ESP Filter.
Zacks Rank: AFL presently carries a Zacks Rank of 2.
Before we get into what to expect for the to-be-reported quarter in detail, it’s worth taking a look at AFL’s previous-quarter performance first.
Q2 Earnings Rewind
In the last reported quarter, the company reported adjusted EPS of $1.58, which beat the Zacks Consensus Estimate by 11.3%. The strong second-quarter earnings were supported by higher sales, reduced benefits and claims, and improved profit levels from U.S. businesses. However, the positives were partially offset by lower net investment income and tepid performance in the Japan unit.
Now, let’s see how things have shaped up prior to the third-quarter earnings announcement.
Factors to Note
In the third quarter, the results of Aflac Japan are likely to have received an impetus from the launch of an enhanced cancer insurance product, thereby leading to increased persistency rates and higher sales. An improved expense ratio is expected to have contributed to the segment’s results. However, limited pay products attaining paid-up status and the execution of a global reinsurance strategy are likely to have been roadblocks for AFL’s Japan unit in the to-be-reported quarter. We expect adjusted revenues of Aflac Japan to be $2,409 million in the third quarter, which hints toward a year-over-year decline of 13.8%.
The prospects of Aflac U.S. are expected to have gained from improved adjusted net investment income, which, in turn, is likely to have stemmed from expanding floating rate income. Additionally, strong dental and vision sales, new product launches and tie-ups are expected to have driven the unit’s quarterly results.
Our estimate for adjusted net investment income in the segment stands at $270.9 million in the to-be-reported quarter, suggesting 27.8% growth year over year. We anticipate adjusted revenues of $1,631.7 million in Aflac U.S., which indicates a 1.6% rise year over year.
Multiple cost-curbing initiatives are likely to have provided some respite to Aflac’s margins in the third quarter. The company continues to undertake investments to upgrade core technology platforms or digital capabilities to save costs, bring about automation in processes and boost operational efficiencies. Our estimate for total acquisition and other operating expenses stands at $1,146.5 million, which implies a decline of 11.7% year over year. Our estimate for total benefits and expenses suggests an 8.3% year-over-year decrease.
Other Stocks to Consider
Here are some other companies from the insurance space, which according to our model, also have the right combination of elements to beat on earnings this time around:
American International Group, Inc. (AIG - Free Report) has an Earnings ESP of +4.02% and a Zacks Rank of 2 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for AIG’s third-quarter 2023 EPS is pegged at $1.55, which has more than doubled from the prior-year quarter’s reported figure.
American International’s earnings beat estimates in each of the trailing four quarters, the average surprise being 13.5%.
Enact Holdings, Inc. (ACT - Free Report) has an Earnings ESP of +2.33% and a Zacks Rank of 2 at present. The Zacks Consensus Estimate for ACT’s third-quarter 2023 EPS is pegged at $0.86, which indicates a decline of 26.5% from the prior-year quarter’s reported figure.
Enact Holdings’ earnings beat estimates in three of the trailing four quarters, missed once, the average surprise being 25%.
American Equity Investment Life Holding Company (AEL - Free Report) currently has an Earnings ESP of +1.44% and a Zacks Rank of 3.
The Zacks Consensus Estimate for AEL’s third-quarter 2023 EPS is pegged at $1.67, suggesting a 68.7% surge from the prior-year quarter’s reported number.
American Equity's earnings beat estimates in two of the trailing four quarters and missed twice, the average surprise being 6.5%.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.