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Aflac (AFL) Up 4.7% Since Last Earnings Report: Can It Continue?

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A month has gone by since the last earnings report for Aflac (AFL - Free Report) . Shares have added about 4.7% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Aflac due for a pullback? 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.

Aflac Q1 Earnings Beat on Lower Benefits & Expenses

Aflac reported strong first-quarter 2024 results, supported by lower benefits and claims, operating expenses and higher investment income, signaling its effective investment strategies. Improving profit levels from both the Japan and U.S. operations were major tailwinds. However, sales figures decreased in both the segments.

It reported first-quarter 2024 adjusted earnings per share of $1.66, which beat the Zacks Consensus Estimate by 5.1%. Also, the bottom line increased from $1.55 per share reported in the year-ago period.

Aflac’s revenues increased 13.3% year over year to $5.4 billion in the quarter under review. The top line beat the consensus mark by 25.9%.

Q1 Performance

Adjusted net investment income increased 10.5% year over year to $934 million.

Total net benefits and claims of $2 billion decreased 6.5% year over year in the first quarter. Total acquisition and operating expenses decreased 4% year over year to $1.3 billion.

Pre-tax earnings surged 61.7% year over year to $2.2 billion in the first quarter.

Inside AFL’s Segments

Aflac Japan: The segment’s adjusted revenues decreased 11.4% year over year to $2.8 billion in the quarter under review. This missed the Zacks Consensus Estimate by 3.9%. Total net earned premiums of $1.8 billion dropped 16.3% year over year due to limited pay products attaining paid-up status and the implementation of a reinsurance transaction earlier. This metric missed the Zacks Consensus Estimate by 5.2%.

Adjusted net investment income increased 6.1% year over year to $648 million due to higher variable investment income, the impact of the weakening Yen and lower hedge costs. Pre-tax adjusted earnings of the segment amounted to $810 million, which increased 2.8% year over year in the first quarter. This metric beat the estimate by 3.6%.

New annualized premium sales of $87 million deteriorated 5.1% year over year due to weaker first-sector sales. The benefit ratio of the segment was 67% in the first quarter.

Aflac U.S.: The segment’s adjusted revenues increased 2.3% year over year to $1.7 billion in the quarter under review. This missed the Zacks Consensus Estimate by 0.8%. Total net earned premiums climbed 3.3% year over year to $1.4 billion due to sales recovery. This metric beat the Zacks Consensus Estimate by 0.8%.

Adjusted net investment income of $206 million climbed 4.6% year over year on the back of increased variable investment income and a move toward higher-yielding fixed-income investments. However, the metric missed the Zacks Consensus Estimate by 5.6%. Pretax adjusted earnings of the segment were $356 million, up 1.1% year over year in the first quarter thanks to lower expenses, partly offset by higher benefits recognized. The metric beat the Zacks Consensus Estimate by 1.7%.

Aflac’s U.S. sales of $298 million fell 5.2% year over year. The first-quarter benefit ratio came in at 46.5%.

Financial Position (as of Mar 31, 2024)

Aflac exited the first quarter with total cash and cash equivalents of $5.1 billion, which increased from $4.3 billion at 2023-end. Total assets fell to $124.7 billion from $126.7 billion at 2023-end.

Adjusted debt increased to $7.4 billion from $7.1 billion at 2023-end. Adjusted debt to adjusted capitalization, excluding accumulated other comprehensive income, came in at 20.4%, which improved 10 basis points (bps) from 2023-end. While it has no debt maturities in less than a year, total debt maturities worth $1.8 billion are expected within the next five years.

Total shareholders' equity of $23.5 billion increased from $22 million at 2023-end.

Adjusted book value per share increased 12.4% year over year to $50.22. Adjusted return on equity, excluding foreign currency impact of 14.3%, improved 10 bps year over year.

Capital Deployment

Aflac bought back 9.3 million shares worth $750 million in the first quarter. It had 68.5 million shares left for buyback as of the first-quarter end.

Management announced dividends of 50 cents per share for the second quarter. The dividend will be paid out on Jun 3, 2024, to shareholders of record as of May 22.


Aflac estimates improved sales in its Japan business for 2024, buoyed by sales campaigns commencing in the second quarter. Management also remains optimistic about profitable growth within its U.S. business. Improving productivity, underwriting discipline and expense management are likely to bolster its margins. New products and distribution strategies are expected to benefit both segments.

It expects the benefit ratio in the Aflac Japan unit to stay within 66-68% in 2024, while the same in Aflac U.S. is likely to be in the 45-47% range.

How Have Estimates Been Moving Since Then?

It turns out, estimates review have trended downward during the past month.

VGM Scores

Currently, Aflac has an average Growth Score of C, a grade with the same score on the momentum front. Following the exact same course, the stock was allocated a grade of C on the value side, putting it in the middle 20% 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.


Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Aflac has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

Performance of an Industry Player

Aflac belongs to the Zacks Insurance - Accident and Health industry. Another stock from the same industry, Unum (UNM - Free Report) , has gained 2.6% over the past month. More than a month has passed since the company reported results for the quarter ended March 2024.

Unum reported revenues of $3.2 billion in the last reported quarter, representing a year-over-year change of +5.5%. EPS of $2.12 for the same period compares with $1.87 a year ago.

For the current quarter, Unum is expected to post earnings of $2.02 per share, indicating a change of -1.9% from the year-ago quarter. The Zacks Consensus Estimate has changed -0.9% over the last 30 days.

Unum has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of C.

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