A month has gone by since the last earnings report for Voya Financial (VOYA). Shares have added about 15.6% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Voya due for a pullback? 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.
Voya Financial's Q1 Earnings Beat Estimates, Up Y/Y
Voya Financial's first-quarter 2020 net operating income of $1.10 per share beat the Zacks Consensus Estimate by 26.4%. Further, the bottom line improved 2.8% year over year.
The company’s results benefited from organic growth across all business units and strong underwriting results in Employee Benefits segment.
Voya Financial’s revenues of $225 million surpassed the Zacks Consensus Estimate by 0.4%. However, the top line declined 9.6% from the year-ago quarter.
Assets under management and administration were $538 billion as of Mar 31, 2020.
Retirement’s adjusted operating earnings of $124 million decreased 3.9% year over year due to negative DAC/VOBA and other intangibles unlocking, lower investment spreads and higher administrative expenses.
Investment Management posted adjusted operating earnings of $40 million, up 17.6% year over year due to higher fee-based margin driven by positive net flows and strong investment capital revenues. It generated $3.1 billion of institutional net flows in the first quarter, which soared 179% year over year.
Employee Benefits’ adjusted operating earnings were $61 million, up 60.5% year over year on the back of improved underwriting results, courtesy of growth in the Voluntary block and improvement in the loss ratio for Group Life, Stop Loss and Voluntary.
Corporate incurred adjusted operating losses of $91 million, narrower than the year-ago quarterly loss of $100 million. This can be attributed to reduced pension costs and elimination of expenses related to divestiture of most of the company’s annuity businesses in 2018.
Share Repurchase and Dividend Update
In first-quarter 2020, Voya Financial repurchased shares worth $406 million. The company has $280 million left under its existing share buyback program as of Mar 31, 2020.
Last month, the company approved a quarterly dividend of 15 cents per share. The dividend will be paid on Jun 26, 2020 to shareholders of record as on May 29.
Voya Financial exited the first quarter with $612 million in excess capital.
2020 Outlook for Cost Savings Unchanged
Despite the COVID-19-induced financial market volatility, Voya Financial retains its cost savings target for 2020. By the end of this year, it plans to achieve cost savings of at least $250 million.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates revision.
At this time, Voya has a poor Growth Score of F, however its Momentum Score is doing a lot better with a B. However, the stock was allocated a grade of F on the value side, putting it in the fifth quintile 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.
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Voya has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Voya Financial, Inc. (VOYA) : Free Stock Analysis Report
To read this article on Zacks.com click here.