Why Is Brighthouse Financial (BHF) Down 2.7% Since Last Earnings Report?
It has been about a month since the last earnings report for Brighthouse Financial (BHF). Shares have lost about 2.7% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Brighthouse Financial 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.
Brighthouse Q2 Earnings & Revenues Beat, Rise
Brighthouse Financial reported second-quarter 2023 adjusted net income of $4.13 per share, which beat the Zacks Consensus Estimate by 16.3%. The bottom line increased 25.5% year over year.
The reported quarter witnessed higher revenues and lower expenses.
Behind the Headlines
Total operating revenues of $2 billion increased 3.8% year over year, driven by higher premiums, net investment income and other income. The top line beat the consensus mark by 4.4%.
Premiums of $211 million increased 26.3% year over year. Our estimate was $168.8 million.
Adjusted net investment income was $1.2 billion in the quarter under review, up 13.9% year over year, driven by asset growth and higher interest rates. The investment income yield was 4.2%.
Total expenses dropped 70.4% to $500 million due to favorable changes in market risk benefits. Our estimate was $605.2 million. Corporate expenses, pretax, were $210 million, up 5.2% year over year.
Quarterly Segmental Update
Annuities reported an adjusted operating income of $291 million, down 9.1% year over year, attributable to higher expenses, lower fees and higher reserves, partially offset by higher net investment income. Annuity sales decreased 0.5% to $2.5 billion.
Life’s adjusted operating earnings were $15 million compared with earnings of $29 million in the year-ago quarter. The year-over-year decline 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 loss at Run-off was $16 million, narrower than the year-ago loss of $157 million.
Corporate & Other delivered an adjusted operating loss of $19 million, narrower than the prior-year loss of $48 million, reflecting higher net investment income and lower expenses, partially offset by a lower tax benefit.
Financial Update
Cash and cash equivalents were $3.7 billion, down 26.3% year over year.
Shareholders’ equity of $4.9 billion at the end of the second quarter of 2023 decreased 31.4% year over year.
Book value per share, excluding accumulated other comprehensive income, was $137.80 as of Jun 30, 2023, up 4.3% year over year.
Statutory combined total adjusted capital was $7.6 billion as of Jun 30, 2023, down 7.3% year over year.
As of Jun 30, 2023, the estimated combined risk based capital ratio was in the range of 430.
Share Buyback Program
Brighthouse bought back shares worth $64 million in the second quarter of 2023, with another $26 million year through Aug 4, 2023.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates review.
VGM Scores
At this time, Brighthouse Financial has a subpar Growth Score of D, however its Momentum Score is doing a lot better with a B. Following the exact same course, 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 C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Brighthouse Financial has a Zacks Rank #2 (Buy). We expect an above average 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, Reinsurance Group (RGA), has gained 0.5% over the past month. More than a month has passed since the company reported results for the quarter ended June 2023.
Reinsurance Group reported revenues of $4.28 billion in the last reported quarter, representing a year-over-year change of +3.3%. EPS of $4.40 for the same period compares with $5.78 a year ago.
Reinsurance Group is expected to post earnings of $4.30 per share for the current quarter, representing a year-over-year change of -17.3%. Over the last 30 days, the Zacks Consensus Estimate has changed +1.3%.
Reinsurance Group has a Zacks Rank #2 (Buy) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of C.
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Brighthouse Financial, Inc. (BHF) : Free Stock Analysis Report
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