Why Is Voya (VOYA) Up 4.2% Since Last Earnings Report?
A month has gone by since the last earnings report for Voya Financial (VOYA). Shares have added about 4.2% in that time frame, underperforming 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 Q3 Earnings Lag, Underwriting Results Soft
Voya Financial reported third-quarter 2023 adjusted operating earnings of $2.07 per share, which missed the Zacks Consensus Estimate by about 1%. The bottom line decreased 10% year over year, attributable to lower net underwriting results, partially offset by higher fee income.
Behind the Headlines
Adjusted operating revenues amounted to $281 billion, which decreased 21.1% year over year. The top line missed the Zacks Consensus Estimate by 16.4%.
Net investment income increased 4.8% year over year to $547 million. Meanwhile, fee income of $489 million increased 9.9% year over year. Premiums totaled $682 million, up 12.5% from the year-ago quarter. Total benefits and expenses were $1.7 billion, up 29.6% from the year-ago quarter.
As of Sep 30, 2023, VOYA’s assets under management, assets under administration and advisement totaled $770.3 million.
Segmental Update
Wealth Solutions recorded adjusted operating earnings of $179 million, which increased 39.8% year over year, primarily due to higher alternative investment income as well as favorable equity market impacts to fee-based margins — all partially offset by lower investment spreads. Full-service recurring deposits grew 10.2% to $14.4 billion, driven by growth in Corporate markets.
Health Solutions adjusted operating earnings amounted to $53 million, which declined 65.6% year over year. Annualized in-force premiums and fees grew 21.1% to $3.3 billion, reflecting growth across all product lines, favorable retention and the positive impact of the Benefitfocus acquisition, which closed in January 2023. Excluding Benefitfocus, annualized in-force premiums and fees grew 14.7%.
Investment Management posted adjusted operating earnings, excluding Allianz's noncontrolling interest, of $49 million, which increased 28.9% year over year. Earnings were driven by higher fee revenues from the Allianz Global Investors (AllianzGI) transaction, which closed in July 2022, and positive investment capital returns. Net outflows were $8.4 billion during the trailing 12 months ended Sep 30, 2023.
Corporate incurred an adjusted operating loss of $52 million, narrower than $65 million loss incurred in the year-ago quarter.
Financial Update
Voya Financial exited the quarter with cash and cash equivalents of $0.8 billion, which decreased 9.8% year over year. Total investments amounted to $36.3 billion, down 7.3% year over year. Long-term debt at quarter-end was $2.1 billion, up 0.05% from 2022 end. The financial leverage ratio deteriorated 10 basis points year over year to 40%. As of Jun 30, 2023, book value per share (excluding AOCI) was $57.55, which decreased 3.4% year over year. Voya Financial exited the third quarter with more than $0.4 billion in excess capital.
Capital Deployment
Voya Financial deployed $0.3 billion in excess capital in third-quarter 2023, including $140 million in debt redemption, $50 million to acquire an interest in the India joint venture and $96 million in share repurchases and dividends.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates.
The consensus estimate has shifted -5.14% due to these changes.
VGM Scores
Currently, Voya has an average Growth Score of C, though it is lagging a lot on the Momentum Score front with an F. However, 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 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.
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Voya Financial, Inc. (VOYA) : Free Stock Analysis Report
