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Here's Why Investors Should Buy Brighthouse Financial (BHF) Now

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Brighthouse Financial, Inc.’s (BHF - Free Report) higher annuity and life insurance sales, a conservative investment strategy, asset growth, improved interest rates and sufficient liquidity make it worth adding to one’s portfolio.

Growth Projections

The Zacks Consensus Estimate for Brighthouse Financial’s 2024 earnings per share indicates a year-over-year increase of 27.6%. The consensus estimate for revenues is pegged at $8.68 billion, implying a year-over-year improvement of 3.6%.

The consensus estimate for 2025 earnings per share and revenues indicates an increase of 11% and 3.3%, respectively, from the corresponding 2024 estimates.

Zacks Rank & Price Performance

Brighthouse Financial currently carries a Zacks Rank #2 (Buy). Over the past year, the stock has lost 7.6% against the industry’s growth of 27.4%.

Zacks Investment Research
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Northbound Estimate Revision

The Zacks Consensus Estimate for 2024 and 2025 earnings has moved 12.5% and 0.6% north, respectively, in the past 30 days, reflecting analysts’ optimism.

Earnings Surprise History

Brighthouse Financial has a decent earnings surprise history. It beat estimates in three of the last four quarters and missed in one, the average being 3.76%.

Return on Equity

BHF’s return on equity for the trailing 12 months of 26.2% expanded 1,160 basis points year over year. This reflects the efficiency in utilizing its shareholders’ funds.

Business Tailwinds

BHF is one of the largest providers of life insurance products in the United States. Given the expansive and compelling suite of life products, the company should benefit from the growing individual insurance market. The insurer remains focused on ramping up sales of life insurance products and expanding its distribution network, aiming to become a premier player in the industry.

BHF remained focused on enhancing its product portfolio with the launch of Shield Level Pay Plus, which is an addition to the suite of Shield Annuities. Strong Shield Level Annuity sales and higher fixed indexed annuity sales from the company's recently launched SecureKey product boosted the Annuity sales. Fixed deferred annuities also contributed to the growth. Improved underwriting margin and net investment income should contribute to higher Life insurance sales.

Brighthouse Financial should benefit from the growing individual insurance market. BHF remains focused on ramping up new sales of life insurance products, strengthening annuity products and expanding its distribution network, aiming to become a premier player in the industry. Strong Shield Level Annuity sales and higher fixed indexed annuity sales from the recently launched SecureKey product contributed to higher Annuity sales. Higher underwriting margin and net investment income boosted Life insurance sales. Execution of life insurance strategy, including the addition of new distribution partners and wholesalers, is expected to drive growth.

Net investment income has been exhibiting an improving trend over the past few quarters. Riding on alternative investment income, asset growth and higher interest rates, the insurer expects the metric to improve in the future. Given a well-diversified and high-quality portfolio as well as a conservative investment strategy, we expect the metric to improve in the future. BHF estimates a 9-11% annual yield over the long term on the alternative investment portfolio.

Brighthouse Financial continued to focus on maintaining the strength of the balance sheet. As of Jun 30, 2024, the estimated combined risk-based capital ratio was 380-400%. Given enhanced financial strength and flexibility, the company remains committed to returning capital to shareholders and intends to maintain an opportunistic share repurchase program to create significant value for them.

Attractive Valuation

BHF shares are trading at a price-to-book value multiple of 0.65, lower than the industry average of 1.80. It also has an impressive Value Score of A. This style score helps find the most attractive value stocks. Back-tested results have shown that stocks with a Value Score of A or B, when combined with a Zacks Rank #1 (Strong Buy) or 2, offer better returns.

Other Stocks to Consider

Some other top-ranked stocks from the insurance industry are F&G Annuities & Life, Inc. (FG - Free Report) , Primerica, Inc. (PRI - Free Report) and Reinsurance Group of America, Incorporated (RGA - Free Report) , each carrying a Zacks Rank #2 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for F&G Annuities & Life’s 2024 and 2025 revenues implies year-over-year growth of 13.9% and 0.9%, respectively. Shares of FG have gained 41.1% in the past year. The Zacks Consensus Estimate for FG’s 2024 and 2025 earnings implies year-over-year growth of 67.1% and 18.5%, respectively. 

Primerica’s earnings surpassed estimates in two of the last four quarters and missed twice, the average surprise being 1.74%. Shares of PRI have rallied 29.3% in the past year. The Zacks Consensus Estimate for PRI’s 2024 and 2025 earnings implies year-over-year growth of 11.5% and 11.3%, respectively. 

Reinsurance Group’s earnings surpassed estimates in each of the last four quarters, the average surprise being 20.51%. Shares of RGA have jumped 53.3% in the past year. The Zacks Consensus Estimate for RGA’s 2024 and 2025 earnings implies year-over-year growth of 8.1% and 3.8%, respectively.

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