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Brighthouse Financial (BHF) Q2 Earnings: What's in Store?

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Brighthouse Financial, Inc. (BHF - Free Report) is set to report second-quarter 2018 earnings on Aug 6 after the market closes. Notably, the company delivered a positive surprise of 15.69% in the first quarter.

Let’s see, what is in store for the company this yet-to-be reported quarter.

An expansive and a compelling suite of life and annuity products plus a strong market presence and efforts to enhance sales of annuity products should have supported Brighthouse Financial’s second-quarter results.

The company’s sustained efforts to boost distribution platform and network coupled with developing new products have likely aided the premium increase. An improving rate environment and an increase in alternate investment income has possibly favored the company’s investment income in the second quarter of 2018. Also, Brighthouse Financial had diverted $2 billion of treasuries into higher-yielding spread assets to aid its investment income.

Annuity sale has probably retained this momentum, driven by better performing Shield and fixed indexed annuities. The company had rolled out new campaign in April to build brand awareness and showcase flagship Shield annuities.

Brighthouse Financial strives to provide cost-effective products to its customers. To that end, the company is exiting Transition Service Agreements with MetLife in its effort to lower costs. However, higher expenses should have continued to pressure on the margin. The company expects second-quarter corporate expenses to be considerably high.

Nonetheless, lower taxes, owing to the implementation of the Tax Cuts and Jobs Act, should have provided a cushion to the bottom line.

The Zacks Consensus Estimate for earnings in the quarter to be reported is pegged at $2.03 per share on revenues of $2.07 billion.

What Our Quantitative Model Predicts

Our proven model does not conclusively show that Brighthouse Financial is likely to beat on earnings this reporting season. This is because a stock needs to have both a positive Earnings ESP and a favorable Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. But that is not the case here as you will see below.

Earnings ESP: Brighthouse Financial has an Earnings ESP of -1.28%, decreasing the odds of an earnings surprise. This is because the Most Accurate Estimate of $2.00 is pegged lower than the Zacks Consensus Estimate of $2.03. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.

Brighthouse Financial, Inc. Price and EPS Surprise

Zacks Rank: Brighthouse Financial carries a Zacks Rank #3, which increases the predictive power of ESP. However, the company’s negative ESP leaves surprise prediction inconclusive.

We caution against the Sell-rated stocks (#4 or 5) going into an earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks to Consider

Some stocks worth considering from the finance sector with the right combination of elements to also surpass estimates this time around are as follows:

TCP Capital Corp. (TCPC - Free Report) is set to report second-quarter earnings on Aug 8 and has an Earnings ESP of +1.01%. The company is a Zacks #3 Ranked player. You can see the complete list of today’s Zacks #1 Rank stocks here.

Starwood Property Trust, Inc. (STWD - Free Report) has an Earnings ESP of +1.25% and a Zacks Rank #2. The company is set to announce second-quarter earnings on Aug 8.   

PennantPark Floating Rate Capital Ltd. (PFLT - Free Report) has an Earnings ESP of +1.89% and a Zacks Rank of 3. The company is expected to announce second-quarter earnings on Aug 14.  

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