Brighthouse Financial (BHF) Down 41.9% Since Last Earnings Report: Can It Rebound?

It has been about a month since the last earnings report for Brighthouse Financial (BHF). Shares have lost about 41.9% 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 the most recent earnings report in order to get a better handle on the important catalysts.

Brighthouse Q4 Earnings Beat, Revenues Miss Estimates

Brighthouse Financial Inc.'s fourth-quarter 2019 adjusted net income of $2.46 per share surpassed the Zacks Consensus Estimate by 5.1%. Moreover, the bottom line improved 57.7% year over year.

The reported quarter witnessed continued sales growth in annuities. For 2019, adjusted net income was $9.58 per share.

Behind the Headlines

Total revenues of $306 billion missed the Zacks Consensus Estimate by 85.2%. Moreover, the top line declined 92.4% year over year, mainly led by derivative loss of $1.9 billion.

Premiums of $209 million decreased 6.3% year over year.

Adjusted net investment income was $904 million in the quarter under review, up 4.8% year over year. The improvement was driven by asset growth. Investment income yield was 4.32%.

Corporate expenses of $283 million pretax increased 14.1% year over year.
Total expenses declined 25.1% year over year to $1.7 billion due to a decrease in amortization of deferred acquisition costs and value of business acquired, lower interest credited to policyholder account balances, and decline in policyholder benefits & claims.

Quarterly Segmental Update

Annuities reported adjusted operating income of $265 million, up 51.4% year over year, reflecting lower deferred acquisition costs amortization, lower reserves and higher net investment income, partially offset by higher expenses and lower fees. Annuity sales increased 10.2% to $1.9 billion.
Life generated adjusted operating income of $75 million, up 17.2% year over year on lower claims and higher net investment income. Life insurance sales were $12 million, which compared favorably with prior-year sales of $4 million.

Adjusted operating earnings of Run-off was $6 million, down 66.7% year over year.

Adjusted operating loss at Corporate & Other was $64 million, which was narrower than the prior-year loss of $71 million on higher net investment income.

Financial Update

The company’s cash and cash equivalents were $2.9 billion, down 30.6% year over year.

Shareholders’ equity of $16.2 billion at the end of the quarter decreased 12.2% year over year.

Book value per share, excluding accumulated other comprehensive income (AOCI), was $118.08 as of Dec 31, 2019, up 1.3% year over year.

Share Buyback Program

Brighthouse bought back shares worth $128 million in the quarter under review. Moreover, the company also announced to repurchase up to an additional $500 million of common stock.

How Have Estimates Been Moving Since Then?

It turns out, estimates revision have trended downward during the past month.

VGM Scores

Currently, Brighthouse Financial has a poor Growth Score of F, however its Momentum Score is doing a lot better with an A. Following the exact same course, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of B. 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 this revision looks promising. Notably, Brighthouse Financial has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.