Why Is Brighthouse Financial (BHF) Up 11.8% Since Last Earnings Report?
A month has gone by since the last earnings report for Brighthouse Financial (BHF). Shares have added about 11.8% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Brighthouse Financial due for a pullback? 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.
Brighthouse Q3 Earnings Top, Revenues Lag Estimates
Brighthouse Financial reported third-quarter 2023 adjusted net income of $4.18 per share, which beat the Zacks Consensus Estimate by 3.7%. The bottom line rebounded from the year-ago loss of 4 cents per share.
The results reflected higher revenues and lower expenses.
Behind the Headlines
Total operating revenues of $2.1 billion increased 9.6% year over year, driven by higher premiums, net investment income and other income. The top line, however, missed the consensus mark by 3.9%.
Premiums of $194 million increased 19.8% year over year.
Adjusted net investment income was $1.2 billion in the quarter under review, up 36.3% year over year, driven by asset growth and higher interest rates. The investment income yield was 4.2%.
Total expenses declined 4.8% to $580 million due to favorable changes in market risk benefits. Corporate expenses, pretax, were $210 million.
Quarterly Segmental Update
Annuities recorded an adjusted operating income of $319 million, down 57.9% year over year, attributable to higher expenses, lower fees and higher reserves, partially offset by higher net investment income. Annuity sales decreased 30.47% to $2.6 billion on lower fixed deferred annuities.
Life’s adjusted operating loss was $73 million compared with a loss of $34 million in the year-ago quarter. The year-over-year deterioration was due to higher expenses and a lower underwriting margin, partially offset by higher net investment income. Life insurance sales increased 31.6% to $25 million.
Adjusted operating earnings at Run-off were $95 million against the year-ago loss of $16 million.
Corporate & Other incurred an adjusted operating loss of $57 million, narrower than the prior-year loss of $37 million, reflecting higher net investment income and underwriting margin.
Financial Update
Cash and cash equivalents were $3.8 billion, down 19.9% year over year.
Shareholders’ equity of $4 billion at the end of the third quarter of 2023 decreased 11.5% year over year.
Book value per share, excluding accumulated other comprehensive income, was $146.61 as of Sep 30, 2023, up 3.6% year over year.
Statutory combined total adjusted capital was $7.3 billion as of Sep 30, 2023, down 8.8% year over year.
As of Sep 30, 2023, the estimated combined risk-based capital ratio was in the range of 400.
Share Buyback Program
Brighthouse bought back shares worth $64 million in the third quarter of 2023, with another $27 million year through Nov 3, 2023.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates.
VGM Scores
Currently, Brighthouse Financial has a poor Growth Score of F, a grade with the same score on the momentum front. 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 F. 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, Brighthouse Financial has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
Brighthouse Financial belongs to the Zacks Insurance - Life Insurance industry. Another stock from the same industry, Lincoln National (LNC), has gained 6.5% over the past month. More than a month has passed since the company reported results for the quarter ended September 2023.
Lincoln National reported revenues of $4.67 billion in the last reported quarter, representing a year-over-year change of +0.9%. EPS of $0.23 for the same period compares with -$10.23 a year ago.
For the current quarter, Lincoln National is expected to post earnings of $1.65 per share, indicating a change of +70.1% from the year-ago quarter. The Zacks Consensus Estimate has changed -2.6% over the last 30 days.
Lincoln National has a Zacks Rank #5 (Strong Sell) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of C.
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