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Aflac (AFL) to Report Q1 Earnings: What's in the Cards?

Aflac Incorporated AFL is scheduled to release first-quarter 2021 results on Apr 28, after the market closes.

Q1 Estimates

The Zacks Consensus Estimate for the company’s first-quarter earnings per share is pegged at $1.20, indicating a fall of 0.8% from the prior-year reported figure. The consensus mark for revenues stands at $5.6 billion, which suggests growth of 9% from the year-ago quarter.

Factors to Note

In the to-be-reported quarter. the company’s Japan segment might have benefited from strong premium persistency rates, stable profit margin and constant product developments. The company’s distribution of cancer insurance in Japan with the cancer rider relaunch might have contributed to total sales in the first quarter.

However, lower digital sales remain a cause of concern. Consequently, Aflac continues to undertake investments in an effort to boost virtual sales. Also, the company expects plunge in premiums stemming from first sector and third sector products in the to-be-reported quarter.

The Zacks Consensus Estimate for the segment’s pretax operating earnings is pegged at $820 million, which indicates a decline of 4.1% from the prior-year quarter.

Also, lower earned premium due to dampened sales might have weighed on the company’s U.S. segment in the to-be-reported quarter. The Zacks Consensus Estimate for pretax operating earnings in this segment stands at $279 million, suggesting a plunge of 14.4% from the prior-year quarter’s reported number.

Nevertheless, the nationwide launch of a dental and vision network this January coupled with Zurich Group Benefits acquisition might have provided some respite to the Aflac U.S. segment’s sales in the first quarter.

It is worth mentioning that its adjusted net investment income is likely to have gained on solid returns from the company’s alternatives portfolio in the first quarter. However, while the company’s sales are likely to remain subdued in the to-be-reported quarter due to limited face-to-face opportunities, it is likely to witness elevated COVID-related claims as the infection continues to spread.

Moreover, constant digital investments and upgradations in its core technological platforms might have led to higher costs for Aflac in the to-be-reported quarter. However, the company’s numerous cost-curbing efforts ranging from hiring restrictions, management of distribution expenses and a voluntary separation plan might have offset this to certain extent. This, in turn, is likely to have led to not only substantial expense savings but also contributed to margins in the to-be-reported quarter.

Earnings Surprise History

The company boasts of an impressive earnings surprise history. Its bottom line beat estimates in each of the trailing four quarters, the average being 15.07%. This is depicted in the chart below:

Aflac Incorporated Price and EPS Surprise

Aflac Incorporated price-eps-surprise | Aflac Incorporated Quote

What Our Quantitative Model Predicts

The proven Zacks model does not conclusively predict an earnings beat for Aflac this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here.

Earnings ESP: Aflac has an Earnings ESP of +3.16%. This is because the Most Accurate Estimate of $1.24 is pegged higher than the Zacks Consensus Estimate of $1.20. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: The company has a Zacks Rank #4 (Sell).

Stocks to Consider

Here are some stocks worth considering from the insurance space with the perfect mix of elements to surpass estimates in their upcoming releases.

Trupanion, Inc. TRUP has an Earnings ESP of +25.00% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

AMERISAFE, Inc. AMSF has an Earnings ESP of +0.46% and a Zacks Rank #3, presently.

American International Group, Inc. AIG has an Earnings ESP of +0.24% and a Zacks Rank #3 at present.

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Aflac Incorporated (AFL): Free Stock Analysis Report
 
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