Voya (VOYA) Down 1% Since Last Earnings Report: Can It Rebound?
A month has gone by since the last earnings report for Voya Financial (VOYA). Shares have lost about 1% 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 the most recent earnings report in order to get a better handle on the important drivers.
Voya Financial Q4 Earnings & Revenues Lag Estimates
Voya Financial reported fourth-quarter 2023 adjusted operating earnings of $1.97 per share, which missed the Zacks Consensus Estimate by about 1%. The bottom line decreased 9.6% year over year, attributable to disappointing net underwriting results, partially offset by higher fee income.
Behind the Headlines
Adjusted operating revenues amounted to $236 million, which decreased 11.3% year over year. The top line missed the Zacks Consensus Estimate by 22.5%.
Net investment income decreased 4.7% year over year to $522 million. Meanwhile, fee income of $489 million increased 8.4% year over year. Premiums totaled $673 million, up 10% from the year-ago quarter. Total benefits and expenses were $1.7 billion, up 16.6% from the year-ago quarter.
As of Dec 31, 2023, VOYA’s assets under management and assets under administration and advisement totaled $813.5 million.
Segmental Update
Wealth Solutions recorded adjusted operating earnings of $147 million, which decreased 1.3% year over year, as higher alternative investment income and favorable equity market impacts to fee-based margins were partially offset by lower spread-based revenues. Full-service recurring deposits grew 10.2% to $14.7 billion, driven by growth in both Corporate and Tax-Exempt markets.
Health Solutions adjusted operating earnings amounted to $44 million, which declined 43.6% year over year, largely attributable to the prior-year period benefiting from exceptionally strong underwriting results in Voluntary and Stop Loss. Annualized in-force premiums and fees grew 19.8% to $3.3 billion on growth across all product lines, favorable retention and the positive impact of the Benefitfocus acquisition, which closed in January 2023.
Investment Management posted adjusted operating earnings, excluding Allianz's noncontrolling interest, of $45 million, which increased 7.1.% year over year. Earnings were driven by higher fee revenues resulting from the cumulative effect of 2023 retail net inflows driven by international distribution, positive capital markets and positive investment capital returns. Net outflows were $14 billion during the trailing 12 months ended Dec 31, 2023.
Corporate incurred an adjusted operating loss of $34 million, narrower than a loss of $59 million incurred in the year-ago quarter.
Financial Update
Voya Financial exited the quarter with cash and cash equivalents of $937 million, which increased 2% year over year. Total investments amounted to $36.6 billion, down 6.4% year over year. Long-term debt at quarter-end was $2.1 billion, down 13.9% from 2022 end. The financial leverage ratio improved 670 basis points year over year to 33.3%.
As of Dec 31, 2023, book value per share (excluding AOCI) was $58.12, which decreased 2.4% year over year. Voya Financial exited 2023 with more than $0.4 billion in excess capital.
Capital Deployment
Voya Financial deployed approximately $1.3 billion of excess capital in 2023, of which approximately $200 million was deployed in the fourth quarter, including $158 million in share repurchases and $42 million in common stock dividends.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates revision.
The consensus estimate has shifted -9.12% due to these changes.
VGM Scores
Currently, 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.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Voya has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.
Performance of an Industry Player
Voya is part of the Zacks Insurance - Life Insurance industry. Over the past month, Reinsurance Group (RGA), a stock from the same industry, has gained 8.2%. The company reported its results for the quarter ended December 2023 more than a month ago.
Reinsurance Group reported revenues of $5.16 billion in the last reported quarter, representing a year-over-year change of +18.2%. EPS of $4.73 for the same period compares with $2.99 a year ago.
Reinsurance Group is expected to post earnings of $4.53 per share for the current quarter, representing a year-over-year change of -12.2%. Over the last 30 days, the Zacks Consensus Estimate remained unchanged.
Reinsurance Group has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of C.
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Voya Financial, Inc. (VOYA) : Free Stock Analysis Report
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