On Mar 12, the Zacks Investment Research downgraded
) to a Zacks Rank #5 (Strong Sell).
Why the downgrade?
Aflac has witnessed sharp downward estimate revisions after
reporting disappointing fourth-quarter and full-year 2012
results. Shares of this life and health insurer are likely to
continue fluctuating given the absence of any major growth
catalyst in the near future.
On Feb 5, Aflac reported fourth-quarter 2012 operating
earnings per share of $1.48, which came in line with the Zacks
Consensus Estimate and were slightly ahead of $1.45 recorded in
the year-ago quarter.
However, total revenue of $6.38 billion fell short of the
Zacks Consensus Estimate of $6.61 billion, although it rose 6.6%
from the prior-year period. An unfavorable dollar/yen exchange
rate and the low-rate environment marred most of the upside.
Alongside, higher operating expenses and strong sales of
low-margin general health products in Japan have moderated the
improvement in benefit ratio, which adversely affects the
Further, Aflac's indulgence in de-risking activities has
shifted its portfolio toward investments with less risk and lower
yields, which will further lessen investment income. Management's
guidance also reflects difficult comps and continuation of the
sluggish growth period in 2013.
The Zacks Consensus Estimate for 2013 decreased 6.0% to $6.39
per share over the last 60 days, with all 14 estimates being
revised downward. For 2014, 7 of 17 estimates were revised
downward, over the last 60 days, sinking the Zacks Consensus
Estimate by 4.8% to $6.91 per share. No upward revisions have
been witnessed for both the years.
Other Stocks to Consider
However, not all insurers are performing as poorly as Aflac.
Some stocks that are outperforming in the insurance sector
CNO Financial Group Inc.
XL Group Plc
). All of these carry a Zacks Rank #1 (Strong Buy).
AEGON N V (AEG): Free Stock Analysis Report
AFLAC INC (AFL): Free Stock Analysis Report
CNO FINL GRP (CNO): Free Stock Analysis
XL GROUP PLC (XL): Free Stock Analysis Report
To read this article on Zacks.com click here.