A month has gone by since the last earnings report for Brighthouse Financial (BHF). Shares have lost about 7.2% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is 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 catalysts.
Brighthouse Beats Q3 Earnings and Revenue Estimates
Brighthouse Financial Inc.'s third-quarter 2019 adjusted net income of $2.33 per share surpassed the Zacks Consensus Estimate by 5%. Moreover, the bottom line increased 4.5% year over year.
The quarter witnessed strong annuity sales and increase in net investment income, partially offset by escalating expenses.
Behind the Headlines
Operating revenues decreased 2.4% year over year to $2.1 billion. However, total revenues of $3.2 billion were up 124% year over year. The top line also beat the Zacks Consensus Estimate by 56.2%.
Premiums of $214 million decreased 4.9% year over year.
Adjusted net investment income was $928 million in the quarter under review, up 8.9% year over year. This upside was driven by asset growth and repositioning of the investment portfolio as well as lower investment expenses. Investment income yield was 4.52%.
Corporate expenses of $248 million pretax increased 2.5% sequentially.
Total expenses increased 33.1% year over year to $2.4 billion on higher policyholder benefits and claims, amortization of DAC and VOBA, and interest expense on debt.
Quarterly Segment Update
Annuities reported adjusted operating income of $203 million, down 49.4% year over year reflecting lower fees, higher deferred acquisition costs amortization, higher expenses and higher taxes, partially offset by higher net investment income. Annuity sales increased 17.3% to $1.8 billion.
Life generated adjusted operating income of $73 million, up 19.7% year over year on lower expenses, partially offset by higher claims. Life insurance sales were $2 million, flat year over year.
Adjusted operating loss of Run-off was $426 million, wider than loss of $105 million in the year-ago quarter. The wider loss indicates higher claims, partially offset by lower taxes.
Adjusted operating loss at Corporate & Other was $19 million, narrower than loss of $87 million incurred in the year-ago quarter. The lower loss reflects higher interest on debt and higher expenses.
As of Sep 30, 2019, cash and cash equivalents were nearly $4.3 billion, up 100% year over year.
Shareholders’ equity of about $17.7 billion at quarter-end increased 37.2% year over year.
Book value per share, excluding preferred stock and accumulated other comprehensive income, was $125.53 as of Sep 30, 2019, up 20.9% year over year.
Share Buyback Program
Brighthouse Financial bought back shares worth $126 million in the third quarter. In October, the company repurchased shares worth $49 million.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision flatlined during the past month.
At this time, Brighthouse Financial has a poor Growth Score of F, however its Momentum Score is doing a lot better with a B. Charting a somewhat similar path, the stock was allocated a grade of A on the value side, putting it in the top quintile 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.
Brighthouse Financial has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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