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Brighthouse Financial (BHF) Down 3.4% Since Last Earnings Report: Can It Rebound?

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A month has gone by since the last earnings report for Brighthouse Financial (BHF - Free Report) . Shares have lost about 3.4% 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 its most recent earnings report in order to get a better handle on the important catalysts.

Brighthouse Financial Q2 Earnings Top, Revenues Up Y/Y

Brighthouse Financial's second-quarter 2019 adjusted net income of $2.56 per share surpassed the Zacks Consensus Estimate by 14.8%. Moreover, the bottom line surged 101.6% year over year.

The quarter witnessed strong annuity sales. The company also completed repositioning of its investment portfolio and pursued share buybacks.

Behind the Headlines

Operating revenues increased 3.3% year over year to $2.2 billion. Total revenues of $2.4 billion were up 39.2% year over year.

Premiums of $232 million increased 4% year over year.

Adjusted net investment income was $942 million in the quarter under review, up 16% year over year. This upside was driven by asset growth, higher alternative investment income and prepayments and repositioning of the investment portfolio.  Investment income yield was 4.67%.

Corporate expenses of $242 million pretax increased 7.6% sequentially.

Total expenses decreased 5.8% year over year to $1.9 billion on lower interest credited to policyholder account balances, drop in amortization of DAC and VOBA and lower other expenses.

Quarterly Segment Update

Annuities reported adjusted operating income of $265 million, up 19.9% year over year reflecting higher net investment income and lower expenses, partially offset by lower fees. Annuity sales increased 34% to $1.9 billion.

Life generated adjusted operating income of $58 million, up 56.8% year over year on lower expenses, partially offset by lower fees. Life insurance sales were $1 million, down 50% year over year.

Adjusted operating income of Run-off was $2 million against loss of $6 million in the year-ago quarter. The upside was driven by higher net investment income and lower expenses, partially offset by higher claims.

Adjusted operating loss at Corporate & Other was $71 million, narrower than loss of $99 million incurred in the year-ago quarter.  The lower loss reflects lower expenses and higher net investment income, partially offset by higher interest expense.

Financial Update

Cash and cash equivalents were nearly $4 billion, up 86.5% year over year.

Shareholders’ equity of about $16.3 billion at quarter-end increased 21.1% year over year.

Book value per share, excluding preferred stock and accumulated other comprehensive income, was $116.85 as of Jun 30, 2019, up 10.9% year over year.

Share Buyback Program

Brighthouse Financial bought back shares worth $136 million in the second quarter and worth another $43 million in July.

How Have Estimates Been Moving Since Then?

It turns out, estimates revision flatlined during the past month.

VGM Scores

Currently, Brighthouse Financial has a subpar Growth Score of D, however its Momentum Score is doing a bit better with a C. 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 B. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

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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