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The Zacks Analyst Blog Highlights: Athene Holding, Torchmark, Genworth Financial, American Equity Investment Life Holding and FGL Holdings

Zacks Equity Research
Lower interest cost coupled with new projects coming online is expected to boost AES Corp.'s (AES) third-quarter earnings.

For Immediate Release

Chicago, IL – August 24, 2018 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include Athene Holding Ltd. ATH, Torchmark Corporation TMK, Genworth Financial, Inc. GNW, American Equity Investment Life Holding Company AEL and FGL Holdings FG.

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Here are highlights from Thursday’s Analyst Blog:

5 Picks from Top-Ranked Life Insurance Industry

Banking on a favorable operating backdrop, the insurance industry seems well-poised for growth. Improving rate environment and a favorable employment backdrop should keep the momentum alive in the life insurance space.

The Federal Reserve has already made two rate hikes this year, taking the tally to seven increases since December 2015. The Central Bank has also hinted at four rate raises in 2018. Though the strengthening of U.S. economy instills hope, certain concerns still keep looming over the ongoing trade war tensions. Nonetheless, per current market speculation there is  a very high possibility of nearly 96% for a rate hike in September 2018, followed by a 60% chance of another hike in December 2018.

A gradual increase in interest rate will tend to lower hedging costs and coupled with control over underwriting expenses might further expand margins.  Life insurers have redesigned and re-priced products, which should help write higher premiums.

Given the healthy graph of U.S. corporate bond market and a stable real estate market owing to a thriving job market, life insurers’ credit-related investment loss should stay below average.

Job growth has been solid through the last three months of 2018 with an average of nearly 0.22 million. Unemployment rate was 3.9% in July, improving 10 basis points sequentially.

Improving GDP (Fed predicts GDP to grow at 2.8% in 2018 and at 2.4% in 2019) buoys optimism. Recent minutes from the FOMC meeting held on Jul 30-Aug 1 stated that real GDP increased at a solid rate during the first half of the year while for the remaining half, it should be slightly lower than the first six months’ tally. Inflation target is expected to be 2%.

A robust economy and an improving employment scenario should spike demand for life insurance and annuity products.

Life Insurance industry is currently ranked at #23, representing the top 9% of the Zacks Industry Ranks. On a positive note, the rank has scaled up by three notches from last week. This upswing was likely as there were three positive estimate revisions and no negative movement.

With respective to price performance, the industry has underperformed the S&P 500 index quarter to date. While the industry has inched up 1.8%, the elite index has registered a 5.5% increase.

Nonetheless, the industry is undervalued at present. Looking at its price-to-book ratio — the best multiple for valuing life insurers because of fluctuations in their quarterly earnings — the industry has a trailing 12-month P/B ratio of 3.5, lower than the S&P 500’s 4.0.   

The hour seems apt to invest in life insurance industry backed by its strong fundamentals, a favorable macro backdrop and undervaluation.

Assured Picks

It might be an uphill task to pick the right stocks for greater investment rewards. Here comes our handy Zacks Stock Screener to help identify the best bets.

We shortlisted four stocks backed by a bullish Zacks Rank, an impressive Value Score and northbound estimates over the past 60 days. Each of the stocks have also outperformed its industry quarter to date.

Athene Holding Ltd., a retirement services company, issues, reinsures and acquires retirement savings products in the United States, the District of Columbia and Germany. The stock sports a Zacks Rank #1 (Strong Buy) and has a favorable Value Score of A. The stock has seen the Zacks Consensus Estimate for current-year earnings being revised 9.9% upward and moved 5.2% north for 2019 over the past 60 days. Athene Holding also topped expectations in the last four quarters and has an expected long-term earnings growth rate of 15%. You can see the complete list of today’s Zacks #1 Rank stocks here.

Torchmark Corporation provides various life and health insurance products and annuities in the United States, Canada and New Zealand. The stock carries a Zacks Rank #2 (Buy) and has an impressive Value Score of A. The Zacks Consensus Estimate has moved 0.5% north for 2018 and 2019 each, over the past 60 days. Torchmark exceeded estimates in the previous four quarters and has an expected long-term earnings growth rate of 13.2%.

Genworth Financial, Inc. provides insurance and homeownership solutions in the United States and internationally. The stock carries a Zacks Rank of 2 and has a solid Value Score of A. The consensus estimate for 2018 bottom line has been raised 13.3%. Genworth Financial surpassed estimates in the preceding three quarters.

American Equity Investment Life Holding Company develops and sells fixed index and fixed rate annuity products in the United States. The company is a Zacks #2 Ranked player, carrying a commendable Value Score of A. The consensus mark for 2018 has moved 3.5% north while for 2019, the estimates have been revised 2.2% upward over the past 60 days. American Equity Investment also outshined expectations in the trailing four quarters.

FGL Holdings sells individual life insurance products and annuities in the United States. The stock carries a Zacks Rank #2 and has a favorable Value Score of A. The stock has seen the Zacks Consensus Estimate for current-year earnings being revised 3.7% upward and moved 5.4% north for 2019 over the past 60 days. FGL Holdings outpaced expectations in the last two quarters.

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About Zacks Equity Research

Zacks Equity Research provides the best of quantitative and qualitative analysis to help investors know what stocks to buy and which to sell for the long-term.

Continuous coverage is provided for a universe of 1,150 publicly traded stocks. Our analysts are organized by industry which gives them keen insights to developments that affect company profits and stock performance. Recommendations and target prices are six-month time horizons.

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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.

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Genworth Financial, Inc. (GNW) : Free Stock Analysis Report
American Equity Investment Life Holding Company (AEL) : Free Stock Analysis Report
Torchmark Corporation (TMK) : Free Stock Analysis Report
Athene Holding Ltd. (ATH) : Free Stock Analysis Report
FGL Holdings (FG) : Free Stock Analysis Report
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