Here's Why Hold Strategy is Apt for Brighthouse Financial (BHF)
Brighthouse Financial, Inc.’s BHF sales of life insurance products, higher Annuity sales, conservative investment strategy, asset growth, higher interest rates, a well-diversified and high-quality portfolio and sufficient liquidity make it worth retaining in one’s portfolio.
Growth Projections
The Zacks Consensus Estimate for Brighthouse Financial’s 2023 earnings is pegged at $15.17 per share, indicating a 38.7% increase from the year-ago reported figure on 3.1% higher revenues of $8.51 billion. The consensus estimate for 2024 earnings is pegged at $17.30 per share, indicating a 14% increase from the year-ago reported figure on 3.38% higher revenues of $8.79 billion.
Northbound Estimate Revision
The Zacks Consensus Estimate for BHF’s 2023 and 2024 earnings has moved 6.1% and 2.9% north, respectively, in the past 60 days. This should instill investors' confidence in the stock.
Zacks Rank & Price Performance
Brighthouse Financial currently carries a Zacks Rank #3 (Hold). In the past year, the stock has lost 1.2% against the industry’s rise of 6.8%.
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Return on Equity
BHF’s return on equity for the trailing 12 months is 14.3%, which compared favorably with the industry average of 13%. This reflects its efficiency in utilizing its shareholders’ funds.
Business Tailwinds
Brighthouse Financial remains well-poised for growth with solid performances by the Annuities and Life segments.
BHF remained focused on enhancing the product portfolio with the launch of Shield Level Pay Plus, which is an addition to the suite of Shield Annuities. In May 2023, the insurer enhanced the Shield Level Annuities product suite, including the launch of Shield options with Step Rate Edge, to help clients keep their plans for retirement on track by providing additional growth opportunities in certain down markets.
The company launched Shield Level Pay Plus in 2022, which is an income solution and being well received in the market. BHF remains focused on offering a portfolio of products that help meet the evolving needs of clients.
Brighthouse Financial is one of the largest providers of life insurance products in the United States. Given the company’s expansive and compelling suite of life products, BHF should benefit from the growing individual insurance market. The insurer remains focused on ramping up the new sales of life insurance products and expanding its distribution network, aiming to become a premier player in the industry.
Net investment income has been exhibiting improving trend over the last few quarters. Riding on asset growth, higher interest rates, a well-diversified and high-quality portfolio as well as conservative investment strategy, the insurer expects the metric to improve in future. BHF estimates an annual alternative investment portfolio yield between 9% and 11% over the long term.
Brighthouse Financial’s liquidity position remains robust with more than $900 million of cash and liquid assets at the holding company as of the end of the second quarter. BHF exited the second quarter of 2023 with combined risk-based capital ratio between 430% and 450%, which is above the targeted range of 400% to 450% in normal markets.
Given enhanced financial strength and flexibility, the company remains committed to returning capital to shareholders and intends to maintain an opportunistic share repurchase program to create significant value for stockholders. At present, BHF had $141 million remaining under its authorization.
Stocks to Consider
Some better-ranked stocks from the life insurance industry are NN Group NV Unsponsored ADR NNGRY, GoHealth, Inc. GOCO and Primerica, Inc. PRI. While NN Group NV sports a Zacks Rank #1 (Strong Buy), GoHealth and Primerica carry a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for NN Group NV’s 2023 and 2024 earnings per share is pegged at $2.73 and $3.90, indicating an increase of 268.92% and 42.86% year over year, respectively. In the past year, NNGRY has lost 21.3%.
The Zacks Consensus Estimate for NNGRY’s 2023 and 2024 earnings has moved 50% and 40% north, respectively, in the past seven days, reflecting analysts’ optimism on the stock.
The Zacks Consensus Estimate for GoHealth’s 2023 and 2024 earnings per share indicates an increase of 75.6% and 33.8% year over year, respectively. In the past year, GOCO has rallied 129%.
The Zacks Consensus Estimate for GoHealth’s 2023 and 2024 revenues is pegged at $820.76 million and $892.27 million, indicating an increase of 29.9% and 8.7% year over year, respectively.
Primerica has a solid track record of beating earnings estimates in each of the last four quarters, the average being 6.46%. In the past year, PRI has gained 43.8%.
The Zacks Consensus Estimate for PRI’s 2023 and 2024 earnings per share is pegged at $15.63 and $17.37, indicating an increase of 36.6% and 11.1% year over year, respectively.
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