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Why Should You Hold Brighthouse (BHF) in Your Portfolio?

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·4 min read
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Brighthouse Financial, Inc. BHF is currently riding on higher alternative investment income, strong annuity sales and less capital-intensive new business.

Growth Projections

The Zacks Consensus Estimate for 2021 earnings per share is pegged at $13.77, indicating year-over-year increase of 218.9%.

Estimate Revision

The Zacks Consensus Estimate for 2021 and 2022 has moved 19.8% and 0.5% north, respectively in the past 30 days. This should instill investors' confidence in the stock.

Earnings Surprise History

Brighthouse has a decent earnings surprise history. It beat estimates in three of the last four quarters and missed in one, with the average being 16.44%.

Zacks Rank & Price Performance

Brighthouse currently carries a Zacks Rank #3 (Hold). In the past year, the stock has rallied 36.7%, outperforming the industry’s increase of 20.4%.

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Zacks Investment Research

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Style Score

The company has a favorable VGM Score of B. VGM Score helps to identify stocks with the most attractive value, best growth and the most promising momentum.

Business Tailwinds

Solid performance at the Annuities, Life and Run-off segments is likely to ramp up revenue growth. Banking on higher alternative investment income, well-diversified and high-quality portfolio as well as conservative investment strategy, adjusted net investment income is expected to improve.

The run-off segment is likely to gain on the back of higher net investment income and a higher underwriting margin.

Brighthouse Financial’s total annuity net inflows should benefit from continued strong sales. The insurer expects to witness a continued shift in business mix profile over time as it adds more cash flow generating and less capital-intensive new business, coupled with the runoff of less profitable business.

In a bid to enhance its product portfolio, Brighthouse focuses on Shield, rolling out SmartCare to more firms and adding more wholesalers to continue the execution on life insurance strategy.

Its balance sheet and liquidity position remained robust in the first quarter. In the current uncertain environment, it estimates combined risk-based capital or RBC ratio in the range of 500% to 520%, which is well above its target range of 400% to 450% in normal market conditions. Further, it ended the quarter with liquid assets at the holding company of approximately $1.6 billion.

Based on solid cash generation abilities, it has been committed to enhancing shareholder value through share buybacks. Currently, it has $212 million remaining under its share repurchase authorization.

Stocks to Consider

Some better-ranked stocks in the insurance sector include Manulife Financial Corp MFC, Cincinnati Financial Corporation CINF and Alleghany Corporation Y, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

The bottom line of Manulife Financial surpassed estimates in three of the last four quarters and missed in the other one, the average being 13.01%.

Cincinnati Financial surpassed estimates in three of the last four quarters and missed in the other one, the average earnings surprise being 17.63%.

Alleghany’s earnings surpassed estimates in each of the last four quarters, the average being 128.63%.

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Alleghany Corporation (Y) : Free Stock Analysis Report

Brighthouse Financial, Inc. (BHF) : Free Stock Analysis Report

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