Brighthouse Financial Inc (BHF): A Deep Dive into Its Performance Potential
Long-established in the Insurance industry, Brighthouse Financial Inc (NASDAQ:BHF) has enjoyed a stellar reputation. However, it has recently witnessed a daily loss of 7.98%, juxtaposed with a three-month change of 4.71%. Fresh insights from the GuruFocus Score Rating hint at potential headwinds. Notably, its diminished rankings in financial strength, growth, and valuation suggest that the company might not live up to its historical performance. Join us as we dive deep into these pivotal metrics to unravel the evolving narrative of Brighthouse Financial Inc.
Understanding the GF Score
The GF Score is a stock performance ranking system developed by GuruFocus using five aspects of valuation, which has been found to be closely correlated to the long-term performances of stocks by backtesting from 2006 to 2021. The stocks with a higher GF Score generally generate higher returns than those with a lower GF Score. Therefore, when picking stocks, investors should invest in companies with high GF Scores. The GF Score ranges from 0 to 100, with 100 as the highest rank.
Financial strength rank: 3/10
Profitability rank: 4/10
Growth rank: 5/10
GF Value rank: 1/10
Momentum rank: 8/10
Based on the above method, GuruFocus assigned Brighthouse Financial Inc the GF Score of 60 out of 100, which signals poor future outperformance potential.
Brighthouse Financial Inc: A Snapshot
Brighthouse Financial Inc is a United States-based provider of annuity products and life insurance through independent distribution channels and marketing arrangements with distribution partners. Its segments are Annuities, Life, and Run-off. It derives a majority of the revenue from the Annuities segment which includes variable, fixed, index-linked and income annuities. The life segment includes variable, term, universal and whole life policies. With a market cap of $3.09 billion and sales of $3.51 billion, the company's operating margin currently stands at 0.
Financial Strength Analysis
Brighthouse Financial Inc's financial strength indicators present some concerning insights about the company's balance sheet health. The company has an interest coverage ratio of 0, which positions it worse than 0% of 319 companies in the Insurance industry. This ratio highlights potential challenges the company might face when handling its interest expenses on outstanding debt. It's worth noting that the esteemed investor Benjamin Graham typically favored companies with an interest coverage ratio of at least five.
Profitability Analysis
Brighthouse Financial Inc's low Profitability rank can also raise warning signals. The company's Net Margin has declined over the past five years (-99.39%), as shown by the following data: 2018: 9.98; 2019: -11.70; 2020: -12.84; 2021: -1.88; 2022: 0.06. With a Piotroski F-Score of 2, Brighthouse Financial Inc's financial health appears concerning. This score, rooted in Joseph Piotroski's nine-point scale, evaluates a firm's profitability, liquidity, and operating efficiency. Given its rating, Brighthouse Financial Inc might be facing challenges in these areas.
Conclusion
Considering the company's financial strength, profitability, and growth metrics, the GuruFocus Score Rating highlights the firm's unparalleled position for potential underperformance. While Brighthouse Financial Inc has a commendable history in the insurance industry, its current financial indicators suggest that it may struggle to maintain its past performance. Therefore, investors should exercise caution and conduct thorough research before making investment decisions.
GuruFocus Premium members can find more companies with strong GF Scores using the following screener link: GF Score Screen
This article first appeared on GuruFocus.
