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Here's Why Brighthouse (BHF) Stock is an Attractive Bet Now

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Zacks Equity Research
·3 min read
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Brighthouse Financial, Inc. BHF has been in investors' good books on the back of a well-diversified and high-quality portfolio, strong sales and favorable market environment.

The company is well poised for progress, as is evident from its favorable VGM Score of A. Here V stands for Value, G for Growth and M for Momentum, with the score being a weighted combination of all three factors.

Over the past 60 days, the company’s 2021 earnings estimates have moved 0.9% north that reflects investor optimism.

The Zacks Consensus Estimate for 2021 earnings per share is pegged at $11.63, indicating year-over-year increase of 593.06%.

The life insurer should benefit from higher premiums, investment income and other revenues. Solid performance at the Annuities, Life and Run-off segments are likely to drive revenues in the days ahead. Also, net investment income will continue to benefit from a well-diversified and high-quality portfolio as well as conservative investment strategy.

In the current uncertain environment, it estimates combined risk-based capital or RBC ratio in the range of 525% to 545%, which is well above its target range of 400% to 450% in normal market conditions.

Brighthouse Financial’s total annuity net inflows should benefit from continued strong sales as well as the market environment. The insurer expects to witness a continued shift in business mix profile over time as it adds more cash flow generating and less capital-intensive new business, coupled with the runoff of less profitable business.

The company continues to make necessary investments in technology infrastructure with the goal of providing better support to distributors and their financial professionals as well as policyholders and contract holders.

It maintained a substantial short-term liquidity position of $5.6 billion at third-quarter end. It resumed the repurchase of common stock on Aug 24. Currently, it has $177 million remaining under its share repurchase authorization. It will continue to emphasize on the completion of its $1.5 billion capital return target.

Brighthouse has a Zacks Rank #2 (Buy) and an impressive Value Score of A. Our research shows that stocks with a Value Style 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.

Shares of Brighthouse have lost 17.2% in the past year compared with the industry’s decline of 11.9%. Nevertheless, the company’s policy to ramp up its growth profile and capital position should help shares bounce back.


Other Stocks to Consider

Investors interested in the insurance industry may also look at Sun Life Financial Inc SLF, Primerica, Inc. PRI and Reinsurance Group of America, Incorporated RGA. While Sun Life Financial sports a Zacks Rank #1, Primerica and Reinsurance Group carry a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Sun Life Financial surpassed estimates in each of the last four quarters, the average being 14.78%.

Primerica surpassed estimates in each of the last four quarters, the average being 10.04%.

Reinsurance Group surpassed estimates in two of the last four quarters with the trailing four-quarter average earnings surprise being 64.17%.

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Sun Life Financial Inc. (SLF) : Free Stock Analysis Report
 
Reinsurance Group of America, Incorporated (RGA) : Free Stock Analysis Report
 
Primerica, Inc. (PRI) : Free Stock Analysis Report
 
Brighthouse Financial, Inc. (BHF) : Free Stock Analysis Report
 
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Zacks Investment Research