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Voya (VOYA) Down 2.3% Since Last Earnings Report: Can It Rebound?

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It has been about a month since the last earnings report for Voya Financial (VOYA). Shares have lost about 2.3% 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 catalysts.

Voya Financial's Q1 Earnings Miss, Revenues Beat

Voya Financial's first-quarter 2021 net operating income of $1.03 per share missed the Zacks Consensus Estimate by 4.6%. Further, the bottom line declined 6.4% year over year.

Higher investment income and increased fee-based margin were offset by lower underwriting results and higher administrative expenses across its segments. Voya Financial’s revenues of $344 million surpassed the Zacks Consensus Estimate by 45.8%. Moreover, the top line increased 52.9% from the year-ago quarter. Assets under management and administration were $729 billion as of Mar 31, 2021.

Segmental Update

Wealth Solutions’ adjusted operating earnings of $255 million increased two-fold year over year due to $89 million of higher investment income, $35 million of higher fee-based margin, $18 million favorable change in DAC/VOBA and other intangibles unlocking and $9 million of lower administrative expenses.

Investment Management posted adjusted operating earnings of $52 million, up 30% year over year due to $24 million of increased investment capital revenues, partially offset by $1 million of lower fee-based margin, and $11 million of higher administrative expenses.

Health Solutions adjusted operating earnings were $37 million, down 39.3% year over year due to $27 million of lower underwriting results and $4 million of higher administrative expenses.

Corporate incurred adjusted operating losses of $71 million, narrower than the year-ago quarterly loss of $91 million. The improvement was due to revenues in the first quarter of 2021 from the company's transition service agreements associated with the sale of substantially all its Individual Life and legacy annuities businesses as well as lower intangibles amortization.

Share Repurchase and Dividend Update

In first-quarter 2021, Voya Financial repurchased shares worth $235 million. The company has $879 million left under its existing share buyback program as of Mar 31, 2021. Last month, the company approved a quarterly dividend of 16.5 cents per share. The dividend will be paid out on Jun 29, 2021 to shareholders of record as on May 26.

Financial Update

Voya Financial exited the first quarter with $1.6 billion in excess capital.
As of Mar 31, 2021, its book value per share was $60.39, up 12.8% year over year.

Sale of Individual Life insurance

Voya completed the sale of substantially all its Individual Life insurance and other legacy annuities businesses on Jan 4, 2021.

2021 Segment View

Investment Management is expected to achieve its 2-4% net flow organic growth target for 2021 due to a strong, unfunded pipeline.

How Have Estimates Been Moving Since Then?

It turns out, estimates review have trended upward during the past month.

VGM Scores

At this time, Voya has a poor Growth Score of F, however its Momentum Score is doing a lot better with an A. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% 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 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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