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Can Aflac (AFL) Tackle Weak Japan Operations in Q2 Earnings?
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Aflac Incorporated (AFL - Free Report) is slated to release second-quarter 2024 results on Jul 31, after the closing bell.
Estimates
The Zacks Consensus Estimate for AFL’s second-quarter earnings per share is pegged at $1.59, which indicates an improvement of 0.6% from the year-ago quarter’s reported figure. The estimate has been unchanged at $1.59 per share in the past week.
The consensus mark for revenues is $4.4 billion, indicating a 15.4% fall from the prior-year quarter’s actual.
Image Source: Zacks Investment Research
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 7.29%. This is depicted in the chart below:
Our proven model does not conclusively predict 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. However, that is not the case here, as you see below.
Earnings ESP: Aflac has an Earnings ESP of +0.38%. This is because the Most Accurate Estimate is pegged at $1.60 per share, higher than the Zacks Consensus Estimate of $1.59. You can uncover the best stocks before they are reported with our Earnings ESP Filter.
Zacks Rank: AFL currently has a Zacks Rank #4 (Sell).
Now, let us see how things have shaped up before the second-quarter earnings announcement.
Factors to Note
Aflac's revenues are likely to have gained on the back of sound contributions from its U.S. operations. The U.S. business is expected to have been driven by higher net earned premiums, which in turn, is likely to have benefited on the back of strong persistency rates. Increased returns from its alternatives and fixed-rate portfolios are likely to have aided the unit's net investment income. Improved net earned premiums and net investment income are likely to have aided the profits of the U.S. segment.
The Zacks Consensus Estimate for AFL's net earned premiums of the U.S. segment is projected at $1.5 billion, indicating 2.3% growth from the prior-year quarter’s reported figure. The consensus mark for the unit’s adjusted net investment income is $210.3 million, indicating a 3.6% improvement from the year-ago quarter’s figure.
However, softer contributions from the Japan segment, in the form of a decline in net earned premiums, are expected to have hurt the overall results of Aflac in the second quarter. The unit is likely to have suffered due to the adverse impacts of paid-up policies, a decline in policies-in-force and lower persistency rates. The Zacks Consensus Estimate for Aflac Japan’s net earned premiums is $1.8 billion, implying a 12.8% fall from the year-ago quarter's figure.
The consensus estimate for AFL’s overall net earned premiums is pegged at $3.3 billion, which indicates a 6.2% decline from the prior-year quarter’s reported number. The consensus mark for overall net investment income is at $886.7 million, indicating an 11.2% drop from the prior-year quarter.
Additionally, the U.S. segment's expense ratio is likely to have increased due to growth initiatives, and an expanding group life and disability network. In Japan, the expense ratio is expected to have improved due to cost-curbing measures and expense allowances from reinsurance transactions. An improved expense ratio is likely to have provided an impetus to Aflac's overall margins.
Stocks to Consider
Here are some companies from the insurance space, which according to our model, have the right combination of elements to beat on earnings this time around:
The Zacks Consensus Estimate for KMPR’s second-quarter 2024 earnings is pegged at $1.19 per share. A loss of 26 cents per share was incurred in the prior-year quarter.
Kemper’s earnings beat estimates in two of the trailing four quarters, matched the mark once and missed the same on the remaining occasion, the average surprise being 9.99%.
Reinsurance Group of America, Incorporated (RGA - Free Report) has an Earnings ESP of +1.46% and sports a Zacks Rank of 1 at present. The Zacks Consensus Estimate for RGA’s second-quarter earnings is pegged at $4.94 per share, which implies a 12.3% rise from the year-ago quarter’s reported figure.
Reinsurance Group’s earnings beat estimates in each of the trailing four quarters, the average surprise being 19.48%.
Palomar Holdings, Inc. (PLMR - Free Report) currently has an Earnings ESP of +1.34% and a Zacks Rank of 3. The Zacks Consensus Estimate for PLMR’s second-quarter earnings is pegged at $1.12 per share, which indicates 30.2% growth from the prior-year quarter's actual.
Palomar’s earnings beat estimates in each of the trailing four quarters, the average surprise being 15.10%.
Image: Bigstock
Can Aflac (AFL) Tackle Weak Japan Operations in Q2 Earnings?
Aflac Incorporated (AFL - Free Report) is slated to release second-quarter 2024 results on Jul 31, after the closing bell.
Estimates
The Zacks Consensus Estimate for AFL’s second-quarter earnings per share is pegged at $1.59, which indicates an improvement of 0.6% from the year-ago quarter’s reported figure. The estimate has been unchanged at $1.59 per share in the past week.
The consensus mark for revenues is $4.4 billion, indicating a 15.4% fall from the prior-year quarter’s actual.
Image Source: Zacks Investment Research
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 7.29%. This is depicted in the chart below:
Aflac Incorporated Price and EPS Surprise
Aflac Incorporated price-eps-surprise | Aflac Incorporated Quote
What Our Quantitative Model Predicts
Our proven model does not conclusively predict 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. However, that is not the case here, as you see below.
Earnings ESP: Aflac has an Earnings ESP of +0.38%. This is because the Most Accurate Estimate is pegged at $1.60 per share, higher than the Zacks Consensus Estimate of $1.59. You can uncover the best stocks before they are reported with our Earnings ESP Filter.
Zacks Rank: AFL currently has a Zacks Rank #4 (Sell).
Now, let us see how things have shaped up before the second-quarter earnings announcement.
Factors to Note
Aflac's revenues are likely to have gained on the back of sound contributions from its U.S. operations. The U.S. business is expected to have been driven by higher net earned premiums, which in turn, is likely to have benefited on the back of strong persistency rates. Increased returns from its alternatives and fixed-rate portfolios are likely to have aided the unit's net investment income. Improved net earned premiums and net investment income are likely to have aided the profits of the U.S. segment.
The Zacks Consensus Estimate for AFL's net earned premiums of the U.S. segment is projected at $1.5 billion, indicating 2.3% growth from the prior-year quarter’s reported figure. The consensus mark for the unit’s adjusted net investment income is $210.3 million, indicating a 3.6% improvement from the year-ago quarter’s figure.
However, softer contributions from the Japan segment, in the form of a decline in net earned premiums, are expected to have hurt the overall results of Aflac in the second quarter. The unit is likely to have suffered due to the adverse impacts of paid-up policies, a decline in policies-in-force and lower persistency rates. The Zacks Consensus Estimate for Aflac Japan’s net earned premiums is $1.8 billion, implying a 12.8% fall from the year-ago quarter's figure.
The consensus estimate for AFL’s overall net earned premiums is pegged at $3.3 billion, which indicates a 6.2% decline from the prior-year quarter’s reported number. The consensus mark for overall net investment income is at $886.7 million, indicating an 11.2% drop from the prior-year quarter.
Additionally, the U.S. segment's expense ratio is likely to have increased due to growth initiatives, and an expanding group life and disability network. In Japan, the expense ratio is expected to have improved due to cost-curbing measures and expense allowances from reinsurance transactions. An improved expense ratio is likely to have provided an impetus to Aflac's overall margins.
Stocks to Consider
Here are some companies from the insurance space, which according to our model, have the right combination of elements to beat on earnings this time around:
Kemper Corporation (KMPR - Free Report) has an Earnings ESP of +14.77% and currently flaunts a Zacks Rank of 1. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for KMPR’s second-quarter 2024 earnings is pegged at $1.19 per share. A loss of 26 cents per share was incurred in the prior-year quarter.
Kemper’s earnings beat estimates in two of the trailing four quarters, matched the mark once and missed the same on the remaining occasion, the average surprise being 9.99%.
Reinsurance Group of America, Incorporated (RGA - Free Report) has an Earnings ESP of +1.46% and sports a Zacks Rank of 1 at present. The Zacks Consensus Estimate for RGA’s second-quarter earnings is pegged at $4.94 per share, which implies a 12.3% rise from the year-ago quarter’s reported figure.
Reinsurance Group’s earnings beat estimates in each of the trailing four quarters, the average surprise being 19.48%.
Palomar Holdings, Inc. (PLMR - Free Report) currently has an Earnings ESP of +1.34% and a Zacks Rank of 3. The Zacks Consensus Estimate for PLMR’s second-quarter earnings is pegged at $1.12 per share, which indicates 30.2% growth from the prior-year quarter's actual.
Palomar’s earnings beat estimates in each of the trailing four quarters, the average surprise being 15.10%.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.