Voya (VOYA) Down 2.9% 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 2.9% 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 drivers.
Voya Financial Q2 Earnings Top on Solid Underwriting
Voya Financial reported second-quarter 2023 adjusted operating earnings of $2.31 per share, which beat the Zacks Consensus Estimate by 12.7%. The bottom line increased 38.3% year over year on strong net underwriting results. Adjusted operating revenues amounted to $347 billion, which increased 43.4% year over year. The top line also beat the Zacks Consensus Estimate by 8.8%.
Net investment income declined 6.2% year over year to $545 million. Meanwhile, fee income of $474 million increased 14.8% year over year. Premiums totaled $677 million, up 13.4% from the year-ago quarter.
Total benefits and expenses were $1.6 billion, up 17.2% from the year-ago quarter. As of Jun 30, 2023, VOYA’s assets under management, assets under administration and advisement totaled $789 million.
Segmental Update
Wealth Solutions reported adjusted operating earnings of $174 million, which decreased 11.7% year over year, primarily due to higher administrative expenses and lower alternative investment income. Full-service recurring deposits grew 9.5% to $14.0 billion.
Health Solutions adjusted operating earnings amounted to $124 million, which increased more than two-fold year over year due to strong in-force block growth, favorable underwriting results and the positive impact of the Benefitfocus acquisition. Annualized in-force premiums and fees grew 22.2% to $3.3 billion, reflecting growth across all product lines, favorable retention and the positive impact of the Benefitfocus acquisition.
Investment Management posted adjusted operating earnings of $33 million, which increased 25% year over year, due to the positive impact of the Allianz Global Investors (AllianzGI) transaction. Net outflows were $5.1 billion during the trailing 12 months ended Jun 30, 2023.
Corporate incurred an adjusted operating loss of $54 million, flat year over year.
Financial Update
Voya Financial exited the quarter with cash and cash equivalents of $1.2 billion, which increased 30% year over year. Total investments amounted to $37.6 billion, down 4% year over year.
Long-term debt at quarter-end was flat from 2022 end at $2.1 billion. The financial leverage ratio deteriorated 230 basis points year over year to 37.7%. As of Jun 30, 2023, book value per share (excluding AOCI) was $55.59, which decreased 6.7% year over year. Voya Financial exited the second quarter with more than $0.5 billion in excess capital.
Capital Deployment
Voya Financial deployed $0.2 billion in excess capital in second-quarter 2023 — including $162 million in share repurchases and $21 million in common stock dividends. The board of directors authorized doubling of common stock dividend to 40 cents per share and $500 million in share buyback. The buyback authorization is now $609 million and will expire on Sep 30, 2024.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended downward during the past month.
VGM Scores
At this time, Voya has an average Growth Score of C, however its Momentum Score is doing a lot better with an A. Charting a somewhat similar path, 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 B. 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. 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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Voya Financial, Inc. (VOYA) : Free Stock Analysis Report
