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Why Is Brighthouse Financial (BHF) Down 4.8% Since Last Earnings Report?

A month has gone by since the last earnings report for Brighthouse Financial (BHF). Shares have lost about 4.8% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Brighthouse Financial due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.

Brighthouse Q1 Earnings Beat, Revenues Miss Estimates

Brighthouse Financial reported first-quarter 2024 adjusted net income of $4.25 per share, which beat the Zacks Consensus Estimate by 7.3%. The bottom line improved 48.6% year over year. The results reflected higher premiums and net investment income as well as lower expenses.

Behind the Headlines

Total operating revenues of $2.1 billion increased 2.9% year over year, driven by higher premiums, net investment income and other income. The top line, however, missed the consensus mark by 3.5%. Premiums of $202 million increased 2.5% year over year.

Adjusted net investment income was $1.3 billion in the quarter under review, up 15.5% year over year, primarily driven by alternative investment income, asset growth and higher interest rates. The investment income yield was 4.25%. Total expenses were $688 million, down 64.5% year over year. Corporate expenses, pretax, were $207 million, down 1.4% year over year.

Quarterly Segmental Update

Annuities recorded an adjusted operating income of $313 million, up slightly year over year. Annuity sales increased 3% to $2.9 billion, attributable to strong Shield Level Annuity sales and higher fixed indexed annuity sales from the company's recently launched SecureKey product.

Life’s adjusted operating loss was $36 million against earnings of $1 million in the year-ago reported quarter. Higher underwriting margin and higher net investment income were offset by unfavorable notable item related to a reinsurance premium rate increase retroactive to September 2019, which resulted from the conclusion of a reinsurance arbitration. Life insurance sales increased 26% to $29 million.

Adjusted operating loss at Run-off was $341 million against the year-ago income of $106 million, reflecting unfavorable notable items related to a reinsurance premium rate increase retroactive to September 2019, which resulted from the conclusion of a reinsurance arbitration.

Corporate & Other incurred an adjusted operating loss of $341 million, wider than the year-ago loss of $14 million, reflecting lower tax.

Financial Update

Cash and cash equivalents were $3.8 billion, down 6.4% year over year.
Shareholders’ equity of $4.2 billion at the end of first-quarter 2024 decreased 27.1% year over year. Book value per share, excluding accumulated other comprehensive income, was $126.35 as of Mar 31, 2024, down 8.9% year over year.

Statutory combined total adjusted capital was $6 billion as of Mar 31, 2024, down 26.8% year over year. As of Mar 31, 2024, the estimated combined risk-based capital ratio was 415.

Share Buyback Program

Brighthouse bought back shares worth $62 million in the first quarter of 2024, with another $27 million through May 3, 2024.

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How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in fresh estimates.

VGM Scores

At this time, Brighthouse Financial has a poor Growth Score of F, a grade with the same score on the momentum front. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% 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.

Outlook

Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Brighthouse Financial has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

Performance of an Industry Player

Brighthouse Financial is part of the Zacks Insurance - Life Insurance industry. Over the past month, Voya Financial (VOYA), a stock from the same industry, has gained 2.4%. The company reported its results for the quarter ended March 2024 more than a month ago.

Voya reported revenues of $287 million in the last reported quarter, representing a year-over-year change of +10%. EPS of $1.88 for the same period compares with $1.69 a year ago.

For the current quarter, Voya is expected to post earnings of $2.24 per share, indicating a change of -3% from the year-ago quarter. The Zacks Consensus Estimate has changed +0.3% over the last 30 days.

The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for Voya. Also, the stock has a VGM Score of C.

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