Should You Hold Brighthouse Financial (BHF) in Your Portfolio?
Brighthouse Financial, Inc.’s BHF higher annuity and life insurance sales, conservative investment strategy, asset growth, higher interest rates, a well-diversified and high-quality portfolio, as well as sufficient liquidity make it worth retaining in one’s portfolio.
Growth Projections
The Zacks Consensus Estimate for Brighthouse Financial’s 2024 earnings per share is pegged at $16.99, indicating a year-over-year increase of 21.4%. The consensus estimate for revenues is $8.59 billion, implying a rise of 2.5%.
The Zacks Consensus Estimate for 2025 earnings per share is pegged at $19.23, indicating a year-over-year rise of 13.1%. The consensus estimate for revenues is $8.74 billion, implying an increase of 1.7%.
Zacks Rank & Price Performance
Brighthouse Financial currently carries a Zacks Rank #3 (Hold). Over the past year, the stock has gained 10.8% compared with the industry’s growth of 31.4%.
Image Source: Zacks Investment Research
Return on Equity
BHF’s return on equity for the trailing 12 months of 20.7% expanded 1,020 basis points year over year and compared favorably with the industry average of 15.3%. This reflects its efficiency in utilizing its shareholders’ funds.
Business Tailwinds
Brighthouse Financial is well-poised for growth, with solid performances by the Annuities and Life segments.
BHF is one of the largest providers of life insurance products in the United States. Given the expansive and compelling suite of life products, the company should benefit from the growing individual insurance market. The insurer remains focused on ramping up sales of life insurance products and expanding its distribution network, aiming to become a premier player in the industry.
BHF remained focused on enhancing its product portfolio with the launch of Shield Level Pay Plus, which is an addition to the suite of Shield Annuities. For 2023, total annuity and total life insurance sales exceeded the 2023 targets. Contributing to the strong total annuity sales results for 2023 was a record sales year for the flagship Shield Level annuity products. Shield sales increased 17% in 2023. In 2023, BHF continued to strengthen the annuity and life insurance product portfolios.
Brighthouse Financial continues to be a leader in the buffered annuity marketplace. In May 2023, BHF introduced new enhancements to the Shield Level annuities product suite to help clients keep their retirement plans on track by providing additional growth opportunities in certain down markets. In November 2023, the insurer launched Brighthouse secure key fixed indexed annuities, which enabled it to expand the distribution footprint in the fixed indexed annuity market. BHF also expanded the life insurance suite with the launch of Brighthouse SmartGuard Plus, the first registered index-linked universal life insurance policy.
Net investment income has been exhibiting an improving trend over the past few quarters. Riding on asset growth, higher interest rates, a well-diversified and high-quality portfolio, and a conservative investment strategy, the insurer expects the metric to improve in the future.
Brighthouse Financial continued to focus on maintaining the strength of the balance sheet. BHF ended 2023 with an estimated combined risk-based capital ratio of approximately 420% and liquid assets at the holding company of $1.3 billion.
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 them. BHF bought back $250 million worth of shares in 2023 and another $30 million year to date. It has $763 million remaining under its current buyback authorizations.
Stocks to Consider
Some better-ranked stocks from the insurance industry are Manulife Financial Corp. MFC, Primerica, Inc. PRI and Ryan Specialty Holdings, Inc. RYAN, 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.
Manulife Financial has a solid track record of beating earnings estimates in each of the last four quarters, the average being 7.01%. Over the past year, shares of MFC have risen 34.3%.
The Zacks Consensus Estimate for MFC’s 2024 and 2025 earnings per share is pegged at $2.71 and $2.97, respectively, indicating a year-over-year increase of 5.4% and 9.7%.
Primerica has a solid track record of beating earnings estimates in three of the last four quarters and missed in one, the average being 3.1%. Over the past year, shares of PRI have gained 55.5%.
The Zacks Consensus Estimate for PRI’s 2024 and 2025 earnings per share is pegged at $17.75 and $19.53, respectively, indicating a year-over-year increase of 10.4% and 10%.
Ryan Specialty outpaced earnings estimates in two of the last four quarters and matched the mark twice, the average surprise being 5.05%. Over the past year, the insurer has gained 46.8%.
The Zacks Consensus Estimate for RYAN’s 2024 earnings suggests a rise of 28.2% and 19.5%, respectively, from the prior-year reported figures.
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
Manulife Financial Corp (MFC) : Free Stock Analysis Report
Primerica, Inc. (PRI) : Free Stock Analysis Report
Brighthouse Financial, Inc. (BHF) : Free Stock Analysis Report
Ryan Specialty Holdings Inc. (RYAN) : Free Stock Analysis Report
