Yahoo Finance Here's Why Hold Strategy Is Apt for Voya Financial (VOYA)
Voya Financial, Inc. VOYA is well-poised for growth, driven by higher investment income, lower fee-based margin, favorable change in deferred acquisition costs and value of business acquired (DAC/VOBA), lower administrative expenses and prudent capital deployment.
Growth Projections
The Zacks Consensus Estimate for Voya Financial’s 2023 earnings is pegged at $7.88 per share, indicating a 3.9% increase from the year-ago reported figure on 6.5% higher revenues of $1.24 billion.
The consensus estimate for 2024 earnings is pegged at $9.16 per share, indicating a 16.2% increase from the year-ago reported figure on 5.4% higher revenues of $1.30 billion.
Earnings Surprise History
Voya Financial has a stellar surprise record. Its earnings beat estimates in three of the last four quarters and missed in one, the average being 36.22%.
Zacks Rank & Price Performance
VOYA currently carries a Zacks Rank #3 (Hold). In the past year, the stock has gained 4.1% against the industry’s decline of 3.1%.
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Return on Equity
The company’s trailing 12-month return on equity was 14.8%, which expanded 560 basis points year over year. The figure reflects its efficiency in utilizing its shareholders’ funds.
Business Tailwinds
Voya Financial’s earnings are driven by its solid segmental performances across Wealth Solutions, Investment Management and Health Solutions. These businesses are higher-growth, higher-return and capital-light units, boasting VOYA’s solid presence in the market.
The Wealth Solutions segment is steadily witnessing significant growth on the back of continued strength in underlying business results, higher surplus income, lower credited interest, higher investment income, lower fee-based margin, a favorable change in DAC/VOBA and lower administrative expenses.
The Investment Management segment should gain from higher investment capital returns owing to its overall market performance and improved fee revenues, driven by higher average equity markets and positive net flows.
Voya Financial is constantly taking strategic steps to ramp up growth in its Investment Management segment. Voya Financial and Allianz Global Investors have inked a long-term strategic partnership that has added scale and diversification to Voya Investment Management. The transaction is expected to be accretive to VOYA’s adjusted operating earnings per share, which is estimated at 6-8% for 2023. In addition, Voya IM’s adjusted operating margin is expected to increase in the range of 29-31% in 2023 and 30-32% in 2024.
The Health Solutions segment of Voya Financial is likely to benefit from growth across all product lines, higher underwriting results, improved investment income and lower net expenses.
VOYA’s capital levels remain strong. It exited the first quarter with excess capital of $0.5 billion. Its organic capital generation demonstrates the high free cash flow generation of businesses. The life insurer also ended the said period with cash and cash equivalents of $724 million. This financial flexibility provides strength to the insurer.
VOYA expects to resume share repurchases in the second quarter of 2023, assuming macro conditions to remain constructive. Solid capital generation should aid the company to resume share repurchase activity in the second quarter and target a dividend increase in the second half of 2023. The company’s prudent capital management includes the realization of 90% to 100% free cash flow conversion in the next three years and operating return on equity between 14% and 16%.
Voya Financial has unveiled its financial plan for 2024. This insurer estimates annual adjusted operating earnings per share growth of about 12-17% through 2024. Net revenue growth of 4-6%, margin expansion of 1-2% and prudent capital management should help VOYA achieve the target.
The life insurer expects net annual revenue growth of 2-4% in Wealth Solutions, 7-10% in Investment Management and 5-7% in Health Solutions to contribute to total net revenue growth.
Stocks to Consider
Some better-ranked stocks from the insurance industry are Reinsurance Group of America, Incorporated RGA, Kinsale Capital Group, Inc. KNSL and RLI Corp. RLI, each sporting a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Reinsurance Group’s 2023 and 2024 earnings per share is pegged at $17.74 and $17.99, indicating a year-over-year increase of 22.9% and 1.4%, respectively.
Reinsurance Group has a solid track record of beating earnings estimates in three of the last four quarters and missing in one, the average being 56.92%. In the past year, RGA has gained 15%.
Kinsale Capital has a solid track record of beating earnings estimates in each of the last trailing four quarters, the average being 14.77%. In the past year, KNSL has gained 34.7%.
The Zacks Consensus Estimate for KNSL’s 2023 and 2024 earnings per share is pegged at $10.37 and $12.41, indicating a year-over-year increase of 32.9% and 19.6%, respectively.
RLI Corp.’s earnings surpassed estimates in each of the last trailing four quarters, the average earnings surprise being 43.50%. In the past year, RLI Corp. has gained 3.8%.
The Zacks Consensus Estimate for RLI’s 2023 and 2024 earnings has moved 2.9% and 0.2% north, respectively, in the past 30 days.
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RLI Corp. (RLI) : Free Stock Analysis Report
Reinsurance Group of America, Incorporated (RGA) : Free Stock Analysis Report
Voya Financial, Inc. (VOYA) : Free Stock Analysis Report
Kinsale Capital Group, Inc. (KNSL) : Free Stock Analysis Report
