Reasons Why Investors Should Hold Brighthouse Financial (BHF)
Brighthouse Financial, Inc. BHF has been gaining from growing individual insurance market, the sales of life insurance products, asset growth, higher interest rates, a well-diversified and high-quality portfolio and prudent capital deployment.
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 $8.50 billion.
The consensus estimate for 2024 earnings is pegged at $17.22 per share, indicating a 13.5% increase from the year-ago reported figure on 3.2% higher revenues of $8.77 billion.
Northbound Estimate Revision
The Zacks Consensus Estimate for BHF’s 2023 and 2024 earnings has moved 6.1% and 2.5% north, respectively, in the past 30 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 gained 4% compared with the industry’s growth of 7.4%.
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Return on Equity
BHF’s return on equity for the trailing 12 months is 14.3%, which expanded 280 basis points year over year. 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, BHF 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 insurer also 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 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 intend 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 Arch Capital Group Ltd. ACGL, Axis Capital Holdings Limited AXS and Kinsale Capital Group, Inc. KNSL. While Arch Capital and Axis Capital sport a Zacks Rank #1 (Strong Buy), Kinsale Capital carries Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Arch Capital has a solid track record of beating earnings estimates in each of the last trailing four quarters, the average being 26.83%. In the past year, ACGL has rallied 65.6%.
The Zacks Consensus Estimate for ACGL’s 2023 and 2024 earnings per share is pegged at $6.73 and $7.43, indicating a year-over-year increase of 38.1% and 10.4%, respectively.
Axis Capital has a solid track record of beating earnings estimates in three of the last four quarters and missing in one, the average being 9.75%. In the past year, AXS has gained 4%.
The Zacks Consensus Estimate for AXS’ 2023 and 2024 earnings per share is pegged at $8.41 and $9.31, indicating a year-over-year increase of 44.7% and 10.7%, respectively.
Kinsale Capital beat estimates in each of the last four quarters, the average being 14.88%. In the past year, KNSL has rallied 54.9%.
The Zacks Consensus Estimate for 2023 and 2024 has moved 8.5% and 7.8% north, respectively, in the past 30 days, reflecting analysts’ optimism.
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Axis Capital Holdings Limited (AXS) : Free Stock Analysis Report
Arch Capital Group Ltd. (ACGL) : Free Stock Analysis Report
Kinsale Capital Group, Inc. (KNSL) : Free Stock Analysis Report
Brighthouse Financial, Inc. (BHF) : Free Stock Analysis Report
