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BHF Stock Trading at Discount to Industry at 0.49X: Time to Buy?
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Brighthouse Financial, Inc. (BHF - Free Report) shares are trading at a discount to the Zacks Life Insurance industry. Its forward price-to-book value of 0.49X is lower than the industry average of 1.85X, the Finance sector’s 3.89X and the Zacks S&P 500 composite’s 8.55X. Also, BHF has a Value Score of A.
Image Source: Zacks Investment Research
The insurer has a market capitalization of $2.75 billion. The average volume of shares traded in the last three months was 0.3 million.
The stock remains attractively valued compared with Reinsurance Group of America, Incorporated (RGA - Free Report) , Primerica, Inc. (PRI - Free Report) and Sun Life Financial Inc. (SLF - Free Report) .
Shares of the life insurer have lost 1.7% in the past three months compared with the industry’s decline of 5.6%.
BHF Price Performance
Image Source: Zacks Investment Research
BHF’s Growth Projection
The Zacks Consensus Estimate for Brighthouse Financial’s 2025 earnings per share and revenues indicates an increase of 11.3% and 5.1%, respectively, from the corresponding 2024 estimates.
Optimistic Analyst Sentiment on BHF
Three of the six analysts covering the stock have raised estimates for 2025 over the past 30 days. Thus, the Zacks Consensus Estimate for 2025 moved 0.6% north in the last 30 days.
Brighthouse Financial’s Return on Capital
BHF’s trailing 12-month return on equity is 23.5%, ahead of the industry average of 15.4%. Return on equity, a profitability measure, reflects how effectively a company is utilizing its shareholders.
Factors Acting in Favor of BHF
Brighthouse Financial 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 margins and net investment income boosted Life insurance sales. Execution of the 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 Sept. 30, 2024, the estimated combined risk-based capital ratio was 365-385%. 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.
Conclusion
Higher annuity and life insurance sales, high-quality portfolio, financial flexibility and effective capital deployment poise the life insurer well for growth. Coupled with the positives, higher return on capital as well as affordability of shares, the time appears right for potential investors to bet on this Zacks Rank #2 (Buy) stock. Also, Brighthouse Financial’s VGM Score of A instills confidence. Back-tested results show that stocks with a VGM Score of A or B, when combined with a Zacks Rank #1 (Strong Buy) or 2 offer the best opportunities in the value investing space. You can see the complete list of today’s Zacks #1 Rank stocks here.
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BHF Stock Trading at Discount to Industry at 0.49X: Time to Buy?
Brighthouse Financial, Inc. (BHF - Free Report) shares are trading at a discount to the Zacks Life Insurance industry. Its forward price-to-book value of 0.49X is lower than the industry average of 1.85X, the Finance sector’s 3.89X and the Zacks S&P 500 composite’s 8.55X. Also, BHF has a Value Score of A.
Image Source: Zacks Investment Research
The insurer has a market capitalization of $2.75 billion. The average volume of shares traded in the last three months was 0.3 million.
The stock remains attractively valued compared with Reinsurance Group of America, Incorporated (RGA - Free Report) , Primerica, Inc. (PRI - Free Report) and Sun Life Financial Inc. (SLF - Free Report) .
Shares of the life insurer have lost 1.7% in the past three months compared with the industry’s decline of 5.6%.
BHF Price Performance
Image Source: Zacks Investment Research
BHF’s Growth Projection
The Zacks Consensus Estimate for Brighthouse Financial’s 2025 earnings per share and revenues indicates an increase of 11.3% and 5.1%, respectively, from the corresponding 2024 estimates.
Optimistic Analyst Sentiment on BHF
Three of the six analysts covering the stock have raised estimates for 2025 over the past 30 days. Thus, the Zacks Consensus Estimate for 2025 moved 0.6% north in the last 30 days.
Brighthouse Financial’s Return on Capital
BHF’s trailing 12-month return on equity is 23.5%, ahead of the industry average of 15.4%. Return on equity, a profitability measure, reflects how effectively a company is utilizing its shareholders.
Factors Acting in Favor of BHF
Brighthouse Financial 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 margins and net investment income boosted Life insurance sales. Execution of the 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 Sept. 30, 2024, the estimated combined risk-based capital ratio was 365-385%. 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.
Conclusion
Higher annuity and life insurance sales, high-quality portfolio, financial flexibility and effective capital deployment poise the life insurer well for growth. Coupled with the positives, higher return on capital as well as affordability of shares, the time appears right for potential investors to bet on this Zacks Rank #2 (Buy) stock. Also, Brighthouse Financial’s VGM Score of A instills confidence. Back-tested results show that stocks with a VGM Score of A or B, when combined with a Zacks Rank #1 (Strong Buy) or 2 offer the best opportunities in the value investing space. You can see the complete list of today’s Zacks #1 Rank stocks here.