It has been about a month since the last earnings report for Voya Financial (VOYA). Shares have lost about 0.5% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Voya due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Voya Financial's Q3 Earnings, Revenues Miss Estimates
Voya Financial's third-quarter 2019 net operating income of $1.36 per share missed the Zacks Consensus Estimate by 2.9%. However, the bottom line improved 1.5% year over year.
The company’s revenues of $187 billion increased 14.7% from the year-ago quarter. However, the top line missed the Zacks Consensus Estimate by 37.9%.
Assets under management and administration were $568 billion as of Sep 30, 2019.
Retirement’s adjusted operating earnings of $117 million decreased 53.7% year over year due to negative DAC/VOBA and other intangibles unlocking, lower investment income and higher administrative expenses.
Investment Management posted adjusted operating earnings of $46 million, down 4.2% year over year due to higher fee-based margin driven by higher Institutional fees from positive net flows and lower investment capital revenues.
It generated $332 million of institutional net flows, reflecting strong commercial growth in the business and recorded the 15th straight quarter of positive institutional net flows.
Employee Benefits’ adjusted operating earnings were $57 million, up 14% year over year on the back of higher underwriting results primarily driven by growth in the Voluntary block as well as improvement in the loss ratio for Group Life and higher administrative expenses.
Individual Life’s adjusted operating losses were $33 million, narrower than the year-ago quarterly loss of $134 million due to lower negative DAC/VOBA and other intangibles unlocking.
Corporate incurred adjusted operating losses of $62 million, wider than the year-ago quarterly loss of $54 million. The year-ago quarter gained from higher positive DAC/VOBA and other intangible unlocking.
Share Repurchase and Dividend Update
In the third quarter of 2019, Voya repurchased shares worth $290 million. Its board of directors also authorized the repurchase of shares worth $800 million set to expire on Dec 31, 2020.
The company hiked its dividend to 15 cents, up from the prior payout of 1 cent. This is in line with the company's plan to increase the dividend yield to at least 1%.
Voya Financial exited the third quarter with $471 million in excess capital.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in fresh estimates.
At this time, Voya has a poor Growth Score of F, however its Momentum Score is doing a bit better with a D. However, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Voya has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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