Back to top

Image: Bigstock

Here's How You Should Play Aflac (AFL) Ahead of Q1 Earnings

Read MoreHide Full Article

Aflac Incorporated (AFL - Free Report) is scheduled to release first-quarter 2024 results on May 1, 2024, after the closing bell. Net premiums earned derived from growing cancer insurance sales coupled with cost-cutting initiatives, partly offset by the impact of paid-up policies, are expected to shape its quarterly results.

Q1 Estimates

The Zacks Consensus Estimate for Aflac’s first-quarter earnings per share is pegged at $1.58, which implies a 1.9% rise from the year-ago quarter’s reported figure.

The consensus mark for revenues is $4.3 billion, suggesting a 10.1% fall from the year-ago quarter’s reported number.

Impressive Price Performance

AFL’s shares have gained 18.9% in the past year compared with the industry’s 16.3% growth.

Zacks Investment Research
Image Source: Zacks Investment Research

Factors to Note

In the first quarter, Aflac’s revenues are likely to have benefited on the back of strong contributions from its Japan and U.S. businesses. In the Japan segment, higher sales from the cancer insurance product, particularly from Japan PostCompany and Japan Post Insurance, are likely to have driven the unit’s net premiums earned. Favorable persistency rates are also expected to have contributed to the upside. This, in turn, is likely to have aided net premiums earned of the the Japan business.

The U.S. segment’s net premiums earned are likely to have gained on the back of solid persistency rates and new business growth in the to-be-reported quarter. Improved net premiums earned in both the Japan and U.S. businesses are expected to have driven overall net premiums of Aflac.

However, the quarterly net premiums earned in the Japan unit are likely to have been partly offset by the impact of reinsurance and paid-up policies.

The Zacks Consensus Estimate for AFL’s net premiums earned is pegged at $3.4 billion, which indicates a decline of 7% from the year-ago quarter’s reported figure.

Adjusted net investment income of the Japan unit is expected to have been aided by improved yields on its U.S. dollar-denominated investments, partly offset by asset transfer due to reinsurance. The same in the U.S. segment is likely to have been aided by increased yields on fixed and floating-rate portfolios in the first quarter.

The Zacks Consensus Estimate for Aflac’s overall net investment income is $907.9 million, which implies an 3.7% fall from the year-ago quarter’s reported number.

Additionally, the expense ratio in the U.S. segment is likely to have witnessed an uptick on the back of its pursuit of growth initiatives and escalation in DAC amortization, partly offset by a decline in total benefits and adjusted expenses.

In the Japan business, the expense ratio is expected to have improved attributable to prudent cost-curbing initiatives and expense allowance received from reinsurance transactions. An improved expense ratio is expected to have provided an impetus to Aflac’s overall margins in the first quarter. All these tailwinds position AFL as a significant stock to monitor closely.

What Our Quantitative Model Unveils

Our proven model predicts an earnings beat for Aflac this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat, which is the case here.

Aflac has an Earnings ESP of +0.63% and a Zacks Rank of 3.

You can uncover the best stocks before they’re reported with our Earnings ESP Filter.

Decent Earnings Surprise History

Aflac's bottom line beat estimates in three of the trailing four quarters and missed the mark once, the average surprise being 9.10%.

Other Stocks to Consider

Here are some other companies from the Finance space, which according to our model, have the right combination of elements to beat on earnings this time around:

Peakstone Realty Trust (PKST - Free Report) has an Earnings ESP of +8.28% and a Zacks Rank of 1, currently. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for PKST’s first-quarter 2024 earnings is pegged at 79 cents per share, suggesting a 16.2% growth from the year-ago quarter’s reported number. The consensus mark for first-quarter earnings has moved 6.8% north in the past 30 days.  

Primerica, Inc. (PRI - Free Report) has an Earnings ESP of +0.46% and a Zacks Rank of 2, at present. The Zacks Consensus Estimate for PRI’s first-quarter 2024 earnings is $4.11 per share, indicating a 17.8% improvement from the year-ago quarter’s reported figure.

Primerica’s earnings beat estimates in three of the trailing four quarters and missed the mark once, the average surprise being 3.10%.

Horace Mann Educators Corporation (HMN - Free Report) has an Earnings ESP of +15.03% and a Zacks Rank of 3, currently. The Zacks Consensus Estimate for HMN’s first-quarter 2024 earnings is pegged at 77 cents per share, which indicates a more than three-fold increase from the year-ago quarter’s reported figure.

Horace Mann’s earnings beat estimates in three of the trailing four quarters and matched the mark once, the average surprise being 15.24%.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.


Zacks' 7 Best Strong Buy Stocks (New Research Report)


Valued at $99, click below to receive our just-released report
predicting the 7 stocks that will soar highest in the coming month.


Click Here, It's Really Free

Published in