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Athene (ATH) Stock Up 100.5% in a Year: Room for More Upside?

Shares of Athene Holding, Ltd. ATH have gained 100.5% in a year, outperforming the industry's increase of 6.9%. The Zacks S&P 500 composite increased 36.6% in the said time frame. With a market capitalization of $13.5 billion, the average volume of shares traded in the last three months was 0.9 million.

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The rally was largely driven by a higher level of sales, strategic investments, and sufficient liquidity.

Over the past 60 days, the company’s 2021 and 2022 earnings estimates have moved 20.4% and 3.1% north, respectively, reflecting investors’ optimism surrounding the stock.

The Zacks Consensus Estimate for 2021 earnings per share is pegged at $12.93, indicating a year-over-year increase of nearly 101.4%.

Will the Bull Run Continue?

Athene continues to make strategic investments in platforms that provide financial returns in addition to their strategic benefits. The pending merger with Apollo remains on track and is expected to be closed in January 2022. The merger is likely to accelerate asset and liability origination, widen distribution channels, and create a leading global solutions provider with a solid capital base.

Athene and Apollo have shared a partnership since 2009. Through the relationship with Apollo, Athene continues to invest in companies that meet the key features of net alternative investments, namely MidCap and Athora.

Favorable performance in the alternative investment portfolio, and higher returns in fixed and other investment portfolio should drive consolidated net investment earned rate (NIER). It expects fixed NIER to be in the range of 3.55% to 3.6% for the remainder of 2021. Alts NIER should gain from continued strong benefit from investment in Venerable. Looking ahead, it expects annualized Alts NIER in the second half of 2021 to be around 10% on an annualized basis.

By virtue of higher pension risk transfer (PRT) premiums and increase in premiums from flow reinsurance, the strong performance of the indices, higher level of sales, growth in investment portfolio, and growth in the block of business, Athene’s top line is likely to improve in the long term. The Zacks Consensus Estimate for the company’s 2021 revenues is pegged at $6.83 billion, indicating a year-over-year increase of 28.1%.

Athene remains extremely well-capitalized with approximately $18.3 billion of aggregate regulatory capital and $4 billion of excess equity capital, which continue to aid organic and inorganic growth, and support additional ratings upgrades and opportunistic share repurchases. Athene was upgraded to "A+" by S&P in May 2021.

Athene is well-positioned for continued growth with access to strategic sidecar with $1.5 billion in available undrawn third-party capital.

Moreover, Athene’s return on equity was 14.1% in the trailing 12-month period, higher than the industry average of 13%. Adjusted operating ROE in the second quarter expanded 1140 bps year over year. This indicates its efficiency in utilizing its shareholders’ funds.

The life insurer has a decent earnings surprise history. Its bottom line beat estimates in each of the last four quarters, the average being 47.78%.

Athene currently carries a Zacks Rank #2 (Buy) and has an impressive Value Score of B. Back-tested results show that stocks with a Value Score of A or B, when combined with a Zacks Rank #1 (Strong Buy) or 2 offer the best opportunities in the value investing space.

Other Stocks to Consider

Some other top-ranked players in the multi-line insurance industry are Brighthouse Financial, Inc. BHF, Voya Financial, Inc. VOYA, and Primerica, Inc. PRI, each carrying a Zacks Rank of 2 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Brighthouse has a trailing four-quarter earnings surprise of 52.23%, on average.

Voya Financial’s earnings surpassed estimates in two of the last four quarters (missing the mark in the other two), the average beat being 9.13%.

Primerica’s bottom line surpassed estimates in three of the last four quarters (missing expectations in the remaining one), the average beat being 7.55%.

5 Stocks Set to Double

Each was handpicked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2021. Previous recommendations have soared +143.0%, +175.9%, +498.3% and +673.0%.

Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.

Today, See These 5 Potential Home Runs >>

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Primerica, Inc. (PRI): Free Stock Analysis Report
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