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Why Are Prudent Investors Favoring Aflac (AFL) Shares Now?
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Aflac Incorporated (AFL - Free Report) is strategically positioned for growth, leveraging higher sales, cost-cutting initiatives and a robust domestic market presence. The expansion of its product suite adds further momentum. The significant floating rate income remains a key driver, fortifying its investment income.
Outperformer & Zacks Rank
Over the past year, shares of Aflac have rallied 13.7%, outperforming the industry’s 9.3% rise. Headquartered in Columbus, GA, AFL operates as a supplemental health and life insurance product provider. It has strong footprints in the United States and Japan. The company has a market cap of $47.8 billion.
Due to its solid prospects, this Zacks Rank #2 (Buy) stock is a compelling addition to investment portfolios at the moment.
Let’s delve deeper.
The Zacks Consensus Estimate for AFL’s current-year earnings is pegged at $6.26 per share, which has witnessed six upward estimate revisions in the past 30 days against one in the opposite direction. The estimate indicates 17.5% year-over-year growth. Aflac beat on earnings in all the last four quarters, the average surprise being 14.5%.
The consensus estimate for Aflac's current-year revenues stands at $18.3 billion. The company foresees enhanced sales in its Aflac Japan segment, driven by strategic initiatives such as product launches, updates and distribution strategies. Additionally, the positive performance of Japan Post contributes to the anticipated growth. The recently launched medical product in mid-September has demonstrated a promising start, further bolstering the company's outlook.
Management expresses confidence in the robust sales performance within its U.S. business. The anticipated strength is attributed to improving productivity and contributions from various platforms, including network, dental, vision, and group life and disability. These factors are poised to sustain positive results for the company.
A significant improvement in the company’s expense ratio is expected to contribute to a decline in the combined ratio below the previous year's level. Projections from our model indicate a combined ratio of 67.9% for 2023, showcasing an improvement from 74.6% a year ago, which is expected to enhance the company's margins.
The implementation of cost-saving initiatives is anticipated to be a driving force for bottom-line growth. Our forecasts suggest a more than 8% year-over-year decline in total benefits and expenses for 2023. AFL's commitment to maintaining an agile workforce is poised to enhance efficiency in the medium to long term.
Aflac's robust balance sheet, highlighted by $5.5 billion in cash and cash equivalents as of Sep 30, 2023, positions the company favorably for initiatives aimed at enhancing shareholder value. With expected debt maturities of $1.3 billion over the next five years, Aflac maintains financial flexibility.
In the third quarter alone, the company demonstrated confidence in its financial position by repurchasing 9.4 million shares, amounting to $700 million. As of the end of the third quarter, it still had 86.4 million shares available for further buybacks, underscoring its commitment to returning value to shareholders.
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 17.2% in the first nine months of 2023. This sustained trend could potentially impact the company's ability to support and sustain future operations. However, we believe that a systematic and strategic plan of action will drive growth in the long term.
The Zacks Consensus Estimate for Brown & Brown’s current-year earnings is pegged at $2.75 per share, which indicates 20.6% year-over-year growth. It has witnessed four upward estimate revisions against none in the opposite direction during the past month. BRO beat earnings estimates in each of the past four quarters, with an average surprise of 12.3%.
The consensus mark for Employers Holdings’ current-year earnings indicates a 17.8% year-over-year increase. It beat earnings estimates in all the past four quarters, with an average surprise of 26.5%. Furthermore, the consensus estimate for EIG’s 2023 revenues suggests 17.5% year-over-year growth.
The Zacks Consensus Estimate for Assurant’s current-year earnings indicates a 27.5% year-over-year increase. It beat earnings estimates in all the past four quarters, with an average surprise of 42.4%. Also, the consensus mark for AIZ’s 2023 revenues suggests 5% year-over-year growth.
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Why Are Prudent Investors Favoring Aflac (AFL) Shares Now?
Aflac Incorporated (AFL - Free Report) is strategically positioned for growth, leveraging higher sales, cost-cutting initiatives and a robust domestic market presence. The expansion of its product suite adds further momentum. The significant floating rate income remains a key driver, fortifying its investment income.
Outperformer & Zacks Rank
Over the past year, shares of Aflac have rallied 13.7%, outperforming the industry’s 9.3% rise. Headquartered in Columbus, GA, AFL operates as a supplemental health and life insurance product provider. It has strong footprints in the United States and Japan. The company has a market cap of $47.8 billion.
Due to its solid prospects, this Zacks Rank #2 (Buy) stock is a compelling addition to investment portfolios at the moment.
Let’s delve deeper.
The Zacks Consensus Estimate for AFL’s current-year earnings is pegged at $6.26 per share, which has witnessed six upward estimate revisions in the past 30 days against one in the opposite direction. The estimate indicates 17.5% year-over-year growth. Aflac beat on earnings in all the last four quarters, the average surprise being 14.5%.
Aflac Incorporated Price and EPS Surprise
Aflac Incorporated price-eps-surprise | Aflac Incorporated Quote
The consensus estimate for Aflac's current-year revenues stands at $18.3 billion. The company foresees enhanced sales in its Aflac Japan segment, driven by strategic initiatives such as product launches, updates and distribution strategies. Additionally, the positive performance of Japan Post contributes to the anticipated growth. The recently launched medical product in mid-September has demonstrated a promising start, further bolstering the company's outlook.
Management expresses confidence in the robust sales performance within its U.S. business. The anticipated strength is attributed to improving productivity and contributions from various platforms, including network, dental, vision, and group life and disability. These factors are poised to sustain positive results for the company.
A significant improvement in the company’s expense ratio is expected to contribute to a decline in the combined ratio below the previous year's level. Projections from our model indicate a combined ratio of 67.9% for 2023, showcasing an improvement from 74.6% a year ago, which is expected to enhance the company's margins.
The implementation of cost-saving initiatives is anticipated to be a driving force for bottom-line growth. Our forecasts suggest a more than 8% year-over-year decline in total benefits and expenses for 2023. AFL's commitment to maintaining an agile workforce is poised to enhance efficiency in the medium to long term.
Aflac's robust balance sheet, highlighted by $5.5 billion in cash and cash equivalents as of Sep 30, 2023, positions the company favorably for initiatives aimed at enhancing shareholder value. With expected debt maturities of $1.3 billion over the next five years, Aflac maintains financial flexibility.
In the third quarter alone, the company demonstrated confidence in its financial position by repurchasing 9.4 million shares, amounting to $700 million. As of the end of the third quarter, it still had 86.4 million shares available for further buybacks, underscoring its commitment to returning value to shareholders.
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 17.2% in the first nine months of 2023. This sustained trend could potentially impact the company's ability to support and sustain future operations. However, 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 Brown & Brown, Inc. (BRO - Free Report) , Employers Holdings, Inc. (EIG - Free Report) andAssurant, Inc. (AIZ - 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 Zacks Consensus Estimate for Brown & Brown’s current-year earnings is pegged at $2.75 per share, which indicates 20.6% year-over-year growth. It has witnessed four upward estimate revisions against none in the opposite direction during the past month. BRO beat earnings estimates in each of the past four quarters, with an average surprise of 12.3%.
The consensus mark for Employers Holdings’ current-year earnings indicates a 17.8% year-over-year increase. It beat earnings estimates in all the past four quarters, with an average surprise of 26.5%. Furthermore, the consensus estimate for EIG’s 2023 revenues suggests 17.5% year-over-year growth.
The Zacks Consensus Estimate for Assurant’s current-year earnings indicates a 27.5% year-over-year increase. It beat earnings estimates in all the past four quarters, with an average surprise of 42.4%. Also, the consensus mark for AIZ’s 2023 revenues suggests 5% year-over-year growth.