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Here's Why Investors Should Hold Voya Financial (VOYA) Stock

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Voya Financial, Inc. (VOYA - Free Report) has been in investors’ good books on the back of higher investment capital returns, higher fee revenues, growth across all product lines and strong financial standing.

Voya surpassed estimates in two of the last four reported quarters and missed in the other two, with the average beat being 9.68%.

Zacks Rank & Price Performance

Voya currently carries a Zacks Rank #3 (Hold). In the past year, the stock has rallied 10%, outperforming the industry’s growth of 3.6%.

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Business Tailwinds

Investment Management segment of Voya Financial should continue to gain from growth in both institutional and retail client assets, favorable investment capital, higher investment capital returns and higher fee revenues driven by higher average equity markets.

Investment Management expects to achieve the high end of 1-3% organic growth for 2021 with over $7 billion of fourth-quarter 2021 funded institutional mandates.

Health Solutions is likely to gain from growth across all product lines, continued demand for protection solutions among both employers and employees, strong alternative and prepayment income, growth of the Stop Loss and Voluntary blocks of business as well as higher alternative asset income.

In 2021, annualized in-force premium growth is expected to be 7-10% in the Health Solutions segment.

Banking on favorable alternative and prepayment income, continued strength in underlying business results, higher surplus income as well as lower credited interest, higher investment income, full-service client net flows and favorable equity markets, Wealth Solutions is expected to gain in the long run.

Continued sales growth and strong retention in several markets are likely to generate positive full-service net inflows.

Voya Financial has unveiled its financial plan for 2024. The insurer estimates annual adjusted operating earnings per share growth of about 12-17% through 2024. Net revenue growth of 4-6%, margin expansion of 1-2%, and prudent capital management should help Voya Financial achieve the target.

Voya Financial’s earnings are expected to be driven by solid performance across Wealth Solutions, Investment Management and Health Solutions. This leading health, wealth, and investment company expects net annual revenue growth of 2-4% in Wealth Solutions, 7-10% in Investment Management, and 5-7% in Health Solutions segments to contribute to total net revenue growth.
Voya Financial’s prudent capital management includes the realization of 90 to 100% free cash flow conversion in the next three years and operating return on equity between 14% and 16%.

The insurer increased dividends to more than 20% in the fourth quarter of 2021. It is able to maintain a dividend yield of over 1%.

By the end of 2021, Voya expects to repurchase at least $1.1 billion of shares. Given the strong excess capital and RBC ratio, the board has approved a new $500 million share repurchase authorization.

In the fourth quarter of 2021, nearly $400 million of senior debt has been redeemed, which is expected to reduce both leverage and future interest expense.

Stocks to Consider

Some better-ranked insurers include Athene Holding Ltd. , Brighthouse Financial, Inc. (BHF - Free Report) and Cincinnati Financial Corporation (CINF - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The bottom line of Athene surpassed estimates in each of the last four quarters, the average being 4612%. In the past year, Athene has rallied 91.6%. The Zacks Consensus Estimate for ATH’s 2021 earnings implies 123.6% year-over-year growth.

Athene is well poised to gain from its higher level of sales, growth in the investment portfolio and strategic relationship with Apollo.

Brighthouse surpassed estimates in each of the last four quarters, the average being 67.61%. In the past year, Brighthouse has rallied 54.2%. The Zacks Consensus Estimate for 2021 and 2022 has moved 14% and 1.3% north, respectively, in the past 60 days.

Brighthouse is well poised to gain from higher alternative investment income, strong annuity sales and less capital-intensive new business.

Cincinnati Financial surpassed estimates in each of the last four quarters, the average earnings surprise being 40.05%. In the past year, Cincinnati Financial has rallied 46.2%. The Zacks Consensus Estimate for 2021 and 2022 has moved 2.5% and 5% north, respectively, in the past 60 days.

Cincinnati Financial is well poised to gain from premium growth initiatives, price increases and a higher level of insured exposures.


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