Can Aflac (AFL) Sustain its Surprise Streak in Q4 Earnings?
Aflac Incorporated AFL is slated to report fourth-quarter 2021 earnings on Feb 2, after the market closes.
Q4 Estimates
The Zacks Consensus Estimate for AFL’s fourth-quarter earnings per share is pegged at $1.25, which indicates an improvement of 16.8% from the prior-year quarter.
The consensus mark for revenues stands at $5.2 billion, suggesting a decline of 11.6% from the year-ago quarter.
Earnings Surprise History
Aflac boasts an impressive earnings surprise history. Its bottom line beat estimates in each of the trailing four quarters, the average surprise being 18.32%. 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 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.
Earnings ESP: Aflac has an Earnings ESP of +3.34%. This is because the Most Accurate Estimate of $1.29 is pegged higher than the Zacks Consensus Estimate of $1.25. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Aflac carries a Zacks Rank of 3. You can see the complete list of today’s Zacks #1 Rank stocks here.
Factors to Note
The Aflac Japan segment is expected to have gained from lower-than-expected benefit ratios, improved net investment income and solid premium persistency rates in the fourth quarter. Better face-to-face opportunities with customers might have aided the segmental sales recovery. Constant efforts to upgrade the business model in the form of technological advancements along with launching diversified products might have favored the segment’s performance in the to-be-reported quarter. However, Aflac is likely to have incurred higher spending on key initiatives followed by seasonal spending and booking of projects in the Japan business.
The Zacks Consensus Estimate for the segment’s pretax operating earnings is pegged at $858 million, which indicates growth of 4.5% from the prior-year reported figure.
Lower incurred benefits, rise in adjusted net investment income and solid premium persistency rates are likely to have benefited the Aflac U.S. segment in the fourth quarter. Revival in economic recovery, which led to increased face-to-face meetings and higher enrollments, might have contributed to rebounding sales. A comprehensive portfolio extending life and disability, dental and vision, and supplemental health coverages may have driven the Aflac U.S. segment’s performance in the to-be-reported quarter. However, elevated adjusted expenses incurred within the segment might have weighed on the segment’s results.
The Zacks Consensus Estimate for pretax operating earnings in this segment stands at $280 million, suggesting an improvement of 49.7% from the year-ago quarter.
While adjusted net investment income for the Aflac Japan segment is likely to have gained on solid returns from its private equity portfolio in the fourth quarter, the metric for the Aflac U.S. segment might have benefited on the back of improved variable investment income.
AFL is likely to have incurred escalating expenses in the fourth quarter due to continuous investments to boost its digital and distribution capabilities. Nevertheless, several cost-curbing efforts of Aflac might have offset this to a certain extent. This, in turn, is likely to have led to not only substantial expense savings but also benefited margins in the to-be-reported quarter.
Other Stocks to Consider
Some other stocks worth considering from the insurance space with a perfect mix of elements to surpass estimates in the upcoming quarterly releases are as follows:
Arch Capital Group Ltd. ACGL has an Earnings ESP of +1.48% and a Zacks Rank #2. ACGL is scheduled to report fourth-quarter 2021 results on Feb 9.
Unum Group UNM has an Earnings ESP of +0.92% and a Zacks Rank #3. UNM is slated to release fourth-quarter 2021 results on Feb 1.
American International Group, Inc. AIG has an Earnings ESP of +4.88% and a Zacks Rank of 3 at present. AIG is slated to release fourth-quarter 2021 results on Feb 16.
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American International Group, Inc. (AIG) : Free Stock Analysis Report
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