Why Should You Hold Voya Financial (VOYA) in Your Portfolio?

Voya Financial, Inc. VOYA has been gaining momentum on the back of external client net flows, strong fee growth and solid capital position.

Growth Projections

The Zacks Consensus Estimate for 2021 and 2022 earnings per share is pegged at $5.39 and $6.80, indicating year-over-year increases of 12% and 26.1%, respectively.

Estimate Revision

The Zacks Consensus Estimate for 2022 moved 0.4% north in the past 30 days, reflecting analysts’ optimism.

Earnings Surprise History

Voya Financial surpassed estimates in three of the last four reported quarters and missed in one, with the average beat being 11.53%.

Zacks Rank & Price Performance

Voya Financial currently carries a Zacks Rank #3 (Hold). In the past year, the stock has rallied 54.5%, outperforming the industry’s growth of 41.3%.

Business Tailwinds

Strong performance across Retirement, Investment Management and Employee Benefits segments will continue to drive revenues for Voya Financial.

The Retirement segment is driven by solid momentum in higher equity markets and business. In 2020, it added 30 government plans and nearly 350,000 participants. With those wins, Voya is now the number one retirement plan provider in the government space.

Investment Management banks on improved external client net flows and strong fee growth from higher institutional Assets Under Management year over year and solid investment performance. With a track record of five consecutive years of positive flows, it expects to achieve a 2-4% organic growth target in 2021.

The Employee Benefits segment seems to gain from the high demand for its product portfolio mainly offered by its Voluntary business.

Furthermore, Voya Financial flaunts a robust capital position on which it returns value to shareholders in the forms of share buybacks and dividend hikes. Notably, its dividend payments have witnessed a CAGR of 49.3% in the past seven years (2014-2021).

Its excess capital of $1.8 billion as of Dec 31, 2020, is above the company’s liquidity target of $200 million and estimated statutory surplus in excess of a 400% combined risk-based capital (RBC) ratio. As of Dec 31, 2020, Voya’s estimated combined RBC ratio was 498%.

Voya Financial’s decision to divest its non-performing Individual Life business and other non-retirement annuities businesses bodes well. In the first quarter of 2021, it divested all its individual life insurance and other legacy non-retirement annuities businesses to Resolution Life US. This has assisted the life-insurer in realizing significant value for the legacy blocks and has enabled it to focus on high-growth, high-return and capital-light businesses.

Stocks to Consider

Some better-ranked stocks in the insurance space are Alleghany Y, Cincinnati Financial CINF and First American Financial FAF, each currently carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Alleghany’s bottom line surpassed estimates in two of the last four quarters and missed in the other two, the average beat being 34.08%.

Cincinnati Financial surpassed earnings estimates in two of the last four quarters and missed in other two, with the average surprise being 4.10%.

First American Financial’s bottom line surpassed estimates in three of the last four quarters and missed in one, the average beat being 15.86%.

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Cincinnati Financial Corporation (CINF) : Free Stock Analysis Report

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Voya Financial, Inc. (VOYA) : Free Stock Analysis Report

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