It has been about a month since the last earnings report for Voya Financial (VOYA). Shares have lost about 21.2% 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 Beats Q4 Earnings & Revenue Estimates
Voya Financial, Inc.’s VOYA fourth-quarter 2019 net operating income of $1.19 per share beat the Zacks Consensus Estimate by 7.21%. Results gained from the elimination of stranded costs related to the sale of the majority of its annuity business in 2018. However, the bottom line declined 9.8% year over year.
The company’s revenues of $276 million surpassed the Zacks Consensus Estimate by 3%. The top line was driven by strong performance in Investment Management and Employee Benefits segments. However, revenues declined 87.4% from the year-ago quarter due to rise in operating expenses.
Assets under management and administration were $603 billion as of Dec 31, 2019.
On Dec 18, 2019, Voya Financial agreed to substantially sell all its individual life and other legacy non-retirement annuities businesses to Resolution Life Group Holdings.
Presently, the company reports results under the following segments — Retirement, Investment Management, Employee Benefits and Corporate.
Retirement’s adjusted operating earnings of $162 million decreased 4.7% year over year on negative DAC/VOBA and other intangibles unlocking, higher fee-based margins due to strong commercial impetus in business and higher equity markets, lower investment income, and higher administrative expenses.
Investment Management posted adjusted operating earnings of $59 million, up 34.1% year over year on higher fee-based margin, driven by higher Institutional fees from positive net flows and lower investment capital revenues. It generated $520 million of institutional net flows.
Employee Benefits’ adjusted operating earnings were $55 million, up 27.9% year over year on 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.
Corporate incurred adjusted operating loss of $98 million. The figure remained flat with the year-ago quarterly loss.
Share Repurchase and Dividend Update
In the fourth quarter of 2019, Voya Financial inked a $200-million accelerated share repurchase (ASR) agreement. Of the total, $160 million shares have been bought back in the fourth quarter. The remaining $40 million are expected to be purchased in the first quarter of 2020.
The company announced a quarterly dividend of 15 cents per share, payable Mar 27, 2020, to shareholders of record as of Feb 28, 2020.
Voya Financial exited the fourth quarter with $896 million in excess capital.
For the year ended Dec 31, 2019, net loss was $379 million against net income of $875 million reported a year ago.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates. The consensus estimate has shifted -6.1% due to these changes.
At this time, Voya has a poor Growth Score of F, however its Momentum Score is doing a lot better with a B. However, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.
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 #5 (Strong Sell). We expect a below average return from the stock in the next few months.
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