Will Higher Benefits Affect Corebridge's (CRBG) Q2 Earnings?
Corebridge Financial, Inc. CRBG is set to report its second-quarter 2023 results on Aug 4, before the opening bell.
What Do Estimates Say?
The Zacks Consensus Estimate for second-quarter earnings per share of 97 cents has witnessed no movement in the past week. The consensus mark for second-quarter revenues is pegged at $4.5 billion.
Corebridge shares started trading on the NYSE on Sep 15, 2022. Since then, it beat the consensus estimate for earnings in all three quarters, the average surprise being 16.4%. This is depicted in the graph below:
Corebridge Financial, Inc. Price and EPS Surprise
Corebridge Financial, Inc. price-eps-surprise | Corebridge Financial, Inc. Quote
Before we get into what to expect for the to-be-reported quarter in detail, it is worth taking a look at CRBG’s previous-quarter performance first.
Q1 Earnings Rewind
In the last reported quarter, the retirement solutions provider’s adjusted earnings of 97 cents per share beat the Zacks Consensus Estimate by 15.5% due to solid base spread income, increased net investment income, and premiums and deposits. However, declined variable investment income and higher benefits and expenses partly offset the upside.
Let’s see how things have shaped up prior to the second-quarter earnings announcement.
Q2 Factors to Note
For the second quarter, the company’s overall portfolio is expected to have witnessed continued growth while new money rates are expected to have increased. This is likely to have boosted CRBG’s base spread income, its major source of income, in the second quarter.
Its broad distribution platform and prudent risk management approach are likely to have played a major role in boosting quarterly results. Increased fixed and fixed index annuity deposits are likely to have benefited its premiums and deposit figures in the quarter under discussion.
Higher premiums and deposits from Institutional Markets, Group Retirement and Individual Retirement are likely to have boosted second-quarter results. Furthermore, increased net investment income from Individual Retirement is expected to be a major contributor for the upside.
With marginal improvement in mortality experienced, the company’s underwriting margin is expected to have increased in the quarter under review. Also, improved asset valuations are expected to have aided its fee income in the second quarter.
Corebridge is expected to have achieved a significant portion of its exit run rate savings from the departure from AIG. However, costs associated with its continued efforts to stand up as a separate entity are likely to have partially offset the upside.
Rising policyholder benefits are likely to have increased the company’s total benefits and expenses in the second quarter, affecting bottom-line growth, making an earnings beat uncertain. The metric is likely to have increased primarily in Individual Retirement and Institutional Markets businesses. Also, a continued decline in variable investment income due to capital market dislocation is likely to have negatively impacted the company’s quarterly results.
Earnings Whispers
Our proven model does not conclusively predict an earnings beat for Corebridge this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. That is not the case here, as you will see below.
Earnings ESP: The company’s Earnings ESP is -0.31%. This is because the Most Accurate Estimate is pegged lower than the Zacks Consensus Estimate of 97 cents.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Corebridge currently sports a Zacks Rank #1.
Stocks to Consider
While an earnings beat looks uncertain for Corebridge, here are some companies from the broader Finance space that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this time around:
American Equity Investment Life Holding Company AEL has an Earnings ESP of +1.12% and is a Zacks #2 Ranked player. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for American Equity Investment’s bottom line for the to-be-reported quarter is pegged at $1.65 per share, which indicates a 68.4% increase from the year-ago period. The consensus estimate for AEL’s revenues is pegged at $555 million.
Brighthouse Financial, Inc. BHF has an Earnings ESP of +0.42% and a Zacks Rank of 3.
The Zacks Consensus Estimate for Brighthouse’s bottom line for the to-be-reported quarter is pegged at $3.55 per share, suggesting a 7.9% year-over-year increase. The consensus estimate for revenues is pegged at $2.1 billion. BHF beat earnings estimates in two of the past four quarters and missed twice.
Runway Growth Finance Corp. RWAY has an Earnings ESP of +2.22% and a Zacks Rank of 2.
The Zacks Consensus Estimate for Runway Growth’s bottom line for the to-be-reported quarter is pegged at 45 cents per share, which indicates a 28.6% year-over-year increase. RWAY beat earnings estimates in three of the past four quarters and met once, with an average surprise of 6.9%.
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American Equity Investment Life Holding Company (AEL) : Free Stock Analysis Report
Brighthouse Financial, Inc. (BHF) : Free Stock Analysis Report
Runway Growth Finance Corp. (RWAY) : Free Stock Analysis Report
Corebridge Financial, Inc. (CRBG) : Free Stock Analysis Report
