Yahoo Finance Brighthouse Financial (BHF) Up 2.2% Since Last Earnings Report: Can It Continue?
It has been about a month since the last earnings report for Brighthouse Financial (BHF). Shares have added about 2.2% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Brighthouse Financial due for a pullback? 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 Q3 Earnings & Revenues Miss, Fall Y/Y
Brighthouse Financial incurred third-quarter 2022 adjusted net loss of 4 cents per share against the Zacks Consensus Estimate of earnings of 78 cents and the year-ago earnings of $6.17.
The reported quarter witnessed lower premiums, higher expenses and lower adjusted net investment income.
Behind the Headlines
Total operating revenues of $1.9 billion decreased 21.1% year over year due to lower premium, universal life and investment-type product policy fees and net investment income. The top line missed the consensus mark by 3.1%.
Premiums of $162 million decreased 16.1% year over year.
Adjusted net investment income was $900 million in the quarter under review, down 30.1% year over year, due to lower alternative investment income, partially offset by asset growth. The investment income yield was 3.2%.
Total expenses increased 16.2% year over year to $2.4 billion due to an increase in policyholder benefits and claims, interest credited to policyholder account balances and amortization of DAC and VOBA. Corporate expenses were $217 million.
Quarterly Segmental Update
Annuities reported an adjusted operating income of $125 million, down 67.5% year over year, due to lower fees, higher reserves and higher deferred acquisition costs (DAC) amortization, partially offset by lower expenses. Annuity sales increased 58% to $3.7 billion driven by higher sales of fixed deferred annuities.
Life generated an adjusted operating loss of $7 million against earnings of $38 million in the year-ago quarter on lower net investment income and a decline in underwriting margin. Life insurance sales decreased 30% to $19 million as a result of the recent macroeconomic headwinds.
Adjusted operating loss at Run-off was $21 million against the year-ago earnings of $38 million due to lower net investment income and underwriting margin.
Corporate & Other broke even against the prior-year loss of $83 million on higher net investment income.
Financial Update
Cash and cash equivalents were $4.8 billion, up 16.7% from 2021 end.
Shareholders’ equity of $10.2 billion at the end of the quarter decreased 63.7% from 2021 end.
Book value per share, excluding accumulated other comprehensive income (AOCI), was $153.47 as of Sep 30, 2022, up 19.7% year over year.
Statutory combined total adjusted capital was $8 billion on Sep 30, 2022, down 18.4% year over year.
As of Sep 30, 2022, the estimated combined RBC ratio was between 450% and 470%.
Share Buyback Program
Brighthouse bought back shares worth $136 million in the quarter under review, with another $52 million through Nov 3.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended downward during the past month.
The consensus estimate has shifted -14.42% 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. Charting a somewhat similar path, 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 F. 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 this revision indicates a downward shift. It's no surprise Brighthouse Financial has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.
Performance of an Industry Player
Brighthouse Financial is part of the Zacks Insurance - Life Insurance industry. Over the past month, Sun Life (SLF), a stock from the same industry, has gained 3.7%. The company reported its results for the quarter ended September 2022 more than a month ago.
Sun Life reported revenues of $6.62 billion in the last reported quarter, representing a year-over-year change of -2.1%. EPS of $1.24 for the same period compares with $1.22 a year ago.
For the current quarter, Sun Life is expected to post earnings of $1.12 per share, indicating a change of -7.4% from the year-ago quarter. The Zacks Consensus Estimate remained unchanged over the last 30 days.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #4 (Sell) for Sun Life. Also, the stock has a VGM Score of B.
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Brighthouse Financial, Inc. (BHF) : Free Stock Analysis Report
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