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Why Is Brighthouse Financial (BHF) Down 11.9% Since Last Earnings Report?

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It has been about a month since the last earnings report for Brighthouse Financial (BHF - Free Report) . Shares have lost about 11.9% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Brighthouse Financial due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.

Brighthouse Financial (BHF - Free Report) Q3 Earnings Top, Revenues Up Y/Y

Brighthouse Financial's third-quarter 2018 adjusted net income of $2.23 per share outpaced the Zacks Consensus Estimate of $2.19 by 1.8%. The bottom line also rebounded from the year-ago loss of $5.64.

The reported quarter witnessed continued sales growth in annuities and an improvement in net investment income.

Net loss came in at $2.26 per share, wider than $7.87 loss incurred in the year-ago quarter.

Behind the Headlines

Operating revenues of $1.2 billion inched up 1.9% year over year.

Premiums of $225 million decreased 4.7% year over year.  

Adjusted net investment income was $852 million in the quarter under review, up 9.2% year over year. This improvement was fueled by growth in average invested assets, the ongoing repositioning of the investment portfolio and higher alternative investment income.  Investment income yield was 4.5%.

Corporate expenses of $242 million pre tax decreased from $288 million pre tax in the second quarter of 2018.

Total expenses declined 14.6% year over year on lower interest credited to policyholder account balances, policyholder benefits as well as a decrease in amortization of deferred acquisition costs and value of business acquired.

Quarterly Segment Update

Annuities reported adjusted operating income of $401 million, up nearly 13% year over year on higher net investment income, partially offset by a rise in deferred acquisition cost and escalated expenses. Annuity sales surged 43%, driven by solid sales of Shield and fixed indexed annuities.

Life generated adjusted operating income of $61 million, having increased more than 10-fold year over year. This uptick stemmed from higher net investment income and lower DAC amortization, partially offset by growth in claims. Life insurance sales were $2 million in the quarter under consideration.

Adjusted operating loss in Run-off was $105 million against earnings of $83 million in the year-earlier period. This downside was attributable to higher claims and reserve development plus lower net investment income, partially offset by reduced expenses.

Adjusted operating loss at Corporate & Other was $87 million, much narrower than the prior-year loss of $1.1 billion due to lower expenses, partially offset by a decline in net investment income.

Financial Update

Cash and cash equivalents were $2.1 billion, up 26.3% year over year.

Shareholders’ equity of $12.9 billion at the quarter-end decreased 6.4% year over year.

Book value per share was $103.80 as of Sep 30, 2018, down 0.2% year over year.

Share Buyback Program

Brighthouse Financial bought back shares worth $42 million in the third quarter.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in fresh estimates. The consensus estimate has shifted -5.71% due to these changes.

VGM Scores

At this time, Brighthouse Financial has a poor Growth Score of F, however its Momentum Score is doing a bit better with a D. However, the stock was allocated a grade of A on the value side, putting it in the top quintile 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.

Outlook

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




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