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Here's Why Investors Should Retain Brighthouse Financial (BHF)

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Brighthouse Financial, Inc. (BHF - Free Report) has been gaining momentum on the back of higher annuity and life insurance sales, conservative investment strategy, asset growth, higher interest rates, a well-diversified and high-quality portfolio, as well as sufficient liquidity.

Growth Projections

The Zacks Consensus Estimate for Brighthouse Financial’s 2024 earnings per share indicates a year-over-year increase of 21.8% from the consensus estimate of 2023. The consensus estimate for revenues is pegged at $8.59 billion, implying a year-over-year improvement of 2.5% from the consensus mark of 2023.

The consensus estimate for 2025 earnings per share indicates a year-over-year increase of 14.4% from the consensus estimate of 2024. The consensus estimate for 2025 revenues is pinned at $8.75 billion, implying a year-over-year improvement of 1.8% from the consensus mark of 2024.

Zacks Rank & Price Performance

Brighthouse Financial currently carries a Zacks Rank #3 (Hold). Over the past year, the stock has gained 7.7% compared with the industry’s growth of 17.7%.

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Northbound Estimate Revision

The Zacks Consensus Estimate for 2024 and 2025 earnings has moved 0.3% and 1.3% north, respectively, in the past 30 days, reflecting analysts’ optimism.

Return on Equity

BHF’s return on equity for the trailing 12 months of 20.7% compared favorably with the industry average of 15.3%. This reflects the efficiency in utilizing its shareholders’ funds.

Business Tailwinds

Brighthouse Financial is well-poised for growth, with solid performances by the Annuities and Life segments.

BHF is one of the largest providers of life insurance products in the United States. Given the expansive and compelling suite of life products, the company should benefit from the growing individual insurance market. The insurer remains focused on ramping up sales of life insurance products and expanding its distribution network, aiming to become a premier player in the industry.

BHF remained focused on enhancing its product portfolio with the launch of Shield Level Pay Plus, which is an addition to the suite of Shield Annuities. For 2023, total annuity and total life insurance sales exceeded the 2023 targets. Contributing to the strong total annuity sales results for 2023 was a record sales year for the flagship Shield Level annuity products. Shield sales increased 17% in 2023. In 2023, BHF continued to strengthen the annuity and life insurance product portfolios.

Brighthouse Financial continues to be a leader in the buffered annuity marketplace. In May 2023, BHF introduced new enhancements to the Shield Level annuities product suite to help clients keep their retirement plans on track by providing additional growth opportunities in certain down markets. In November 2023, the insurer launched Brighthouse secure key fixed indexed annuities, which enabled it to expand the distribution footprint in the fixed indexed annuity market. BHF also expanded the life insurance suite with the launch of Brighthouse SmartGuard Plus, the first registered index-linked universal life insurance policy.

Net investment income has been exhibiting an improving trend over the past few quarters. Riding on asset growth, higher interest rates, a well-diversified and high-quality portfolio, and a conservative investment strategy, the insurer expects the metric to improve in the future.

Brighthouse Financial continued to focus on maintaining the strength of the balance sheet. BHF ended 2023 with an estimated combined risk-based capital ratio of approximately 420% and liquid assets at the holding company of $1.3 billion.

Given enhanced financial strength and flexibility, the company remains committed to returning capital to shareholders and intends to maintain an opportunistic share repurchase program to create significant value for them.

Stocks to Consider

Some better-ranked stocks from the insurance industry are HCI Group, Inc. (HCI - Free Report) , Palomar Holdings, Inc. (PLMR - Free Report) and Reinsurance Group of America, Incorporated (RGA - Free Report) . While HCI Group and Palomar Holdings sport a Zacks Rank #1 (Strong Buy) each, Reinsurance Group carries a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

HCI Group has a solid track record of beating earnings estimates in each of the trailing four quarters, the average being 522.51%. In the past year, shares of HCI have surged 116.1%.

The Zacks Consensus Estimate for HCI’s 2024 and 2025 earnings implies year-over-year growth of 37.9% and 11.6%, respectively, from the consensus estimate of the corresponding years.

Palomar Holdings has a solid track record of beating earnings estimates in each of the trailing four quarters, the average being 11.12%. In the past year, shares of PLMR have soared 40.1%.

The Zacks Consensus Estimate for PLMR’s 2024 and 2025 earnings implies year-over-year growth of 16.2% and 18%, respectively, from the consensus estimate of the corresponding years.

Reinsurance Group has a solid track record of beating earnings estimates in each of the trailing four quarters, the average being 24.39%. In the past year, shares of RGA have jumped 30.4%.

The Zacks Consensus Estimate for RGA’s 2024 and 2025 earnings per share has moved up 0.4% and 0.7% in the past seven days. 

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