Here's Why Hold Strategy is Apt for Voya Financial (VOYA) Now
Voya Financial, Inc.’s VOYA strategic acquisitions, higher underwriting results, improved investment income, stronger surplus income, lower credited interest and sufficient liquidity make it worth retaining in one’s portfolio.
Growth Projections
The Zacks Consensus Estimate for Voya Financial’s 2023 earnings is pegged at $8.04 per share, indicating a 6% increase from the year-ago reported figure on 11.5% higher revenues of $1.30 billion.
The consensus estimate for 2024 earnings is pegged at $9.21 per share, indicating a 14.5% increase from the year-ago reported figure on 5.5% higher revenues of $1.37 billion.
Earnings Surprise History
Voya Financial has a solid earnings surprise history. It beat estimates in six of the last seven quarters and missed in one.
Zacks Rank & Price Performance
VOYA currently carries a Zacks Rank #3 (Hold). Year to date, the stock has gained 12.3%, outperforming the industry’s rise of 9.7%.
Image Source: Zacks Investment Research
Return on Equity
The life insurer’s trailing 12-month return on equity was 16.6%, which compared favorably with the industry average of 13%. The figure reflects its efficiency in utilizing its shareholders’ funds.
Style Score
Voya Financial has a VGM Score of B. VGM Score helps identify stocks with the most attractive value, best growth and the most promising momentum.
Business Tailwinds
VOYA’s earnings are driven by its solid segmental performances across Wealth Solutions, Investment Management and Health Solutions. These businesses are higher-growth, higher-return and capital-light units, boasting the company’s solid presence in the market.
The Wealth Solutions segment is steadily witnessing significant growth on the back of continued strength in underlying business results, higher surplus income, lower credited interest, improved investment income, weaker fee-based margin, a favorable change in deferred acquisition costs and value of business acquired and lower administrative expenses. In Wealth Solutions, full-service recurring deposits should continue to gain from growth in corporate markets.
The Investment Management segment should gain from higher investment capital returns owing to its overall market performance and improved fee revenues, driven by higher average equity markets and positive net flows.
VOYA is constantly taking strategic steps to ramp up growth in its Investment Management segment. Voya Financial and Allianz Global Investors have inked a long-term strategic partnership that has added scale and diversification to Voya Investment Management. The transaction is expected to be accretive to the company’s adjusted operating earnings per share, which is estimated at 6-8% for 2023. In addition, Voya IM’s adjusted operating margin is expected to increase in the range of 29-31% in 2023 and 30-32% in 2024.
The Health Solutions segment of Voya Financial is likely to benefit from growth across all product lines, higher underwriting results, improved investment income and lower net expenses.
The company’s capital levels remain strong. As of Jun 30, 2023, the estimated combined risk-based capital ratio, with adjustments for certain intercompany transactions, was 405%. VOYA’s organic capital generation demonstrates the high free cash flow generation of businesses. This financial flexibility provides strength to the insurer.
Operational excellence has been helping the company deploy capital for enhancing shareholders’ value. Increasing the dividend continues to reflect its confidence in the stability of cash flows at more than 90% free cash flow conversion and will help broaden the insurer’s investor base.
Stocks to Consider
Some better-ranked stocks from the life-insurance industry are Reinsurance Group of America, Incorporated RGA, Primerica PRI and GoHealth GOCO, each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Reinsurance Group has a decent track record of beating earnings surprise in three of the last four quarters, while missing once, the average beat being 30.5%.
The Zacks Consensus Estimate for 2023 and 2024 earnings per share is pegged at $18.13 and $18.26, indicating an increase of 25.6% and 0.6% year over year, respectively. Year to date, RGA’s shares have gained 3.4%.
Primerica has a decent track record of beating earnings surprise in each of the last four quarters, the average beat being 6.46%.
The Zacks Consensus Estimate for PRI’s 2023 and 2024 earnings per share indicates a year-over-year increase of 36.6% and 11.1%, respectively. Year to date, shares of PRI have gained 42.5%.
The Zacks Consensus Estimate for GoHealth’s 2023 and 2024 revenues indicates a year-over-year increase of 29.9% and 8.7%, respectively.
The Zacks Consensus Estimate for GOCO’s 2023 and 2024 earnings per share indicates a year-over-year increase of 75.6% and 33.8%, respectively. Year to date, shares of GOCO have surged 38.8%.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Reinsurance Group of America, Incorporated (RGA) : Free Stock Analysis Report
Primerica, Inc. (PRI) : Free Stock Analysis Report
Voya Financial, Inc. (VOYA) : Free Stock Analysis Report
GoHealth, Inc. (GOCO) : Free Stock Analysis Report
