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Is it the Right Time to Add Aflac (AFL) Stock to Your Kitty?

·4 min read

Aflac Incorporated AFL seems to be a good investment choice for investors, courtesy of growing premiums, a broad product suite built on product launches and upgrades of existing products, technology advancements and a sound financial position.

Zacks Rank & Price Performance

Aflac currently carries a Zacks Rank #2 (Buy). In a year, the stock has gained 23.3% compared with the industry’s rally of 19.7%. The Finance sector and the Zacks S&P 500 composite have gained 7.8% and 13%, respectively, in the same time frame.

Zacks Investment Research
Zacks Investment Research


Image Source: Zacks Investment Research

Favorable Style Score

Aflac carries an impressive Value Score of A. Value Score helps find stocks that are undervalued. Back-tested results have shown that stocks with a favorable Value Score, when combined with a solid Zacks Rank, are the best investment bets.

Northbound Estimate Revision

The Zacks Consensus Estimate for 2022 has moved north by 0.2% in the past 30 days, reflecting analyst optimism.

Impressive Earnings Surprise History

Aflac boasts a solid earnings surprise history, wherein the bottom line outpaced estimates in each of the trailing four quarters, the average surprise being 18.20%.

Strong ROE

Return on equity (ROE) for the trailing 12 months stands at 12.1% for Aflac, which remains higher than the industry’s figure of 11.7%. This reflects the insurer’s efficiency in utilizing shareholders’ funds.

Business Tailwinds

Revenues of Aflac are expected to benefit on the back of increased sales across its Aflac Japan and Aflac U.S segments, through which AFL devises supplemental insurance products and distributes them across the two countries. The insurer remains optimistic about improving sales figures in both its segments for 2022, while new business formation is expected to act as an added tailwind for the U.S. segment in the days ahead. Undoubtedly, higher sales of Aflac’s products can contribute to the insurer’s premiums, which usually contribute the most to its top-line growth.

Aflac has frequently resorted to product launches and upgrades to meet the evolving needs of consumers. Whenever required, AFL has not stepped back from integrating digital solutions within its offerings to keep pace with the ongoing trend of digitization. In February 2022, Aflac collaborated with the digital health platform NeuroFlow to integrate a cutting-edge mental health solution within the insurer’s Group Long-Term Disability offering

Aflac continues to pursue significant investments in digital transformation efforts, which have upgraded the operational efficiencies of the company and enabled it to transition to digital sales methods. This, in turn, might continue to generate sound profit margins for AFL.

Aflac boasts a solid financial standing backed by a strong cash balance and adequate cash-generating abilities. AFL generated cash from operations worth $5.1 billion in 2021. These advantages enable Aflac to undertake growth-related initiatives and engage in prudent capital-deployment moves through share buybacks and dividend payments. Banking on solid cash flow, Aflac has uninterruptedly hiked dividends for nearly four decades. Its leverage ratio of 19.3% at 2021-end was lower than the industry’s figure of 19.7%.

Other Stocks to Consider

Some other top-ranked stocks in the insurance space are United Fire Group, Inc. UFCS, American Financial Group, Inc. AFG and RLI Corp. RLI. While United Fire Group sports a Zacks Rank #1 (Strong Buy), American Financial and RLI carry a Zacks Rank #2 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

United Fire’s earnings surpassed estimates in three of the last four quarters and met once, the average surprise being 275.45%. The Zacks Consensus Estimate for UFCS’s 2022 earnings suggests an improvement of 18.3% from the year-ago reported figure. The consensus mark for United Fire’s 2022 earnings has moved north by 122.2% in the past 30 days.

The bottom line of American Financial outpaced earnings estimates in each of the last four quarters, the average surprise being 39.58%. The Zacks Consensus Estimate for AFG’ 2022 earnings has moved north by 3.3% in the past 30 days. American Financial has a Value Score of B.

RLI has a trailing four-quarter earnings surprise of 40.23%, on average. The Zacks Consensus Estimate for RLI’s 2022 earnings has moved north by 1.3% in the past 60 days. RLI has a Growth Score of B.

American Financial stock has gained 24.2% in a year. Shares of United Fire and RLI have lost 10.9% and 3.4%, respectively, in the same time frame.


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RLI Corp. (RLI) : Free Stock Analysis Report

Aflac Incorporated (AFL) : Free Stock Analysis Report

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United Fire Group, Inc (UFCS) : Free Stock Analysis Report

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