We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Why Is Brighthouse Financial (BHF) Up 37.4% Since Last Earnings Report?
Read MoreHide Full Article
A month has gone by since the last earnings report for Brighthouse Financial (BHF - Free Report) . Shares have added about 37.4% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Brighthouse Financial due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Brighthouse Q1 Earnings and Revenues Beat Estimates
Brighthouse Financial first-quarter 2020 adjusted net income of $2.60 per share surpassed the Zacks Consensus Estimate by 35.4%. Moreover, the bottom line improved 31.3% year over year.
Sales growth continued in Annuities and Life.
Behind the Headlines
Operating revenues of $2.1 billion beat the Zacks Consensus Estimate by 5.5%. Moreover, the top line increased 4.8% year over year, driven by higher universal life and investment-type product policy fees, net investment income and other revenues.
Premiums of $198 million decreased 12.8% year over year.
Adjusted net investment income was $920 million in the quarter under review, up 13.4% year over year. The improvement was driven by higher alternative investment income and asset growth. Investment income yield was 4.3%.
Corporate expenses of $214 million pretax decreased 24.4% year over year.
Total expenses increased 66.2% year over year to $2.7 billion, attributable to an increase in amortization of deferred acquisition costs and higher policyholder benefits & claims.
Quarterly Segmental Update
Annuities reported adjusted operating income of $316 million, up 7.1% year over year, reflecting lower amortization of deferred acquisition costs, lower expenses, and higher net investment income, partially offset by higher reserves. Annuity sales increased 15% to nearly $2 billion.
Life generated adjusted operating income of $11 million, down 56% year over year on higher DAC amortization and a lower underwriting margin, partially offset by lower expenses and higher net investment income. Life insurance sales were $16 million, which surged 1500% from prior-year sales of $1 million.
Adjusted operating loss at Run-off was $70 million, wider than $36 million loss incurred in the year-ago quarter, attributable to higher net investment income, partially offset by a lower underwriting margin and higher expenses.
Adjusted operating loss at Corporate & Other was $64 million, which was wider than the prior-year loss of $52 million.
Financial Update
The company’s cash and cash equivalents were $8.9 billion, up from $2.9 billion as on Dec 31, 2019.
Shareholders’ equity of $20.4 billion at the end of the quarter was up from $12.2 billion as on Dec 31, 2019.
Book value per share, excluding accumulated other comprehensive income (AOCI), was $172.28 as of Mar 31, 2020, up 55% year over year.
Statutory combined total adjusted capital on a preliminary basis decreased to $7.2 billion at first quarter end from $9.8 billion at 2019 end, attributable to equity market and interest rate declines, a $300 million ordinary subsidiary dividend paid to the holding company, and unfavorable non-variable annuity results.
As of Mar 31, 2020, estimated combined risk based capital ratio was between 515% and 535%.
Share Buyback Program
Brighthouse bought back shares worth $316 million through May 8. The company has temporarily suspended share buyback program.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates. The consensus estimate has shifted -18.62% due to these changes.
VGM Scores
Currently, Brighthouse Financial has a subpar Growth Score of D, however its Momentum Score is doing a bit better with a C. However, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Brighthouse Financial has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Why Is Brighthouse Financial (BHF) Up 37.4% Since Last Earnings Report?
A month has gone by since the last earnings report for Brighthouse Financial (BHF - Free Report) . Shares have added about 37.4% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Brighthouse Financial due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Brighthouse Q1 Earnings and Revenues Beat Estimates
Brighthouse Financial first-quarter 2020 adjusted net income of $2.60 per share surpassed the Zacks Consensus Estimate by 35.4%. Moreover, the bottom line improved 31.3% year over year.
Sales growth continued in Annuities and Life.
Behind the Headlines
Operating revenues of $2.1 billion beat the Zacks Consensus Estimate by 5.5%. Moreover, the top line increased 4.8% year over year, driven by higher universal life and investment-type product policy fees, net investment income and other revenues.
Premiums of $198 million decreased 12.8% year over year.
Adjusted net investment income was $920 million in the quarter under review, up 13.4% year over year. The improvement was driven by higher alternative investment income and asset growth. Investment income yield was 4.3%.
Corporate expenses of $214 million pretax decreased 24.4% year over year.
Total expenses increased 66.2% year over year to $2.7 billion, attributable to an increase in amortization of deferred acquisition costs and higher policyholder benefits & claims.
Quarterly Segmental Update
Annuities reported adjusted operating income of $316 million, up 7.1% year over year, reflecting lower amortization of deferred acquisition costs, lower expenses, and higher net investment income, partially offset by higher reserves. Annuity sales increased 15% to nearly $2 billion.
Life generated adjusted operating income of $11 million, down 56% year over year on higher DAC amortization and a lower underwriting margin, partially offset by lower expenses and higher net investment income. Life insurance sales were $16 million, which surged 1500% from prior-year sales of $1 million.
Adjusted operating loss at Run-off was $70 million, wider than $36 million loss incurred in the year-ago quarter, attributable to higher net investment income, partially offset by a lower underwriting margin and higher expenses.
Adjusted operating loss at Corporate & Other was $64 million, which was wider than the prior-year loss of $52 million.
Financial Update
The company’s cash and cash equivalents were $8.9 billion, up from $2.9 billion as on Dec 31, 2019.
Shareholders’ equity of $20.4 billion at the end of the quarter was up from $12.2 billion as on Dec 31, 2019.
Book value per share, excluding accumulated other comprehensive income (AOCI), was $172.28 as of Mar 31, 2020, up 55% year over year.
Statutory combined total adjusted capital on a preliminary basis decreased to $7.2 billion at first quarter end from $9.8 billion at 2019 end, attributable to equity market and interest rate declines, a $300 million ordinary subsidiary dividend paid to the holding company, and unfavorable non-variable annuity results.
As of Mar 31, 2020, estimated combined risk based capital ratio was between 515% and 535%.
Share Buyback Program
Brighthouse bought back shares worth $316 million through May 8. The company has temporarily suspended share buyback program.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates. The consensus estimate has shifted -18.62% due to these changes.
VGM Scores
Currently, Brighthouse Financial has a subpar Growth Score of D, however its Momentum Score is doing a bit better with a C. However, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Brighthouse Financial has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.