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Here’s Why You Should Hold Brighthouse Financial (BHF) Stock – December 21, 2022

Brighthouse Financial, Inc. (BHF Free Report) has been gaining momentum on the back of higher net investment income, a higher underwriting margin, sufficient liquidity and prudent capital deployment.

Estimate Revision

The Zacks Consensus Estimate for Brighthouse’s 2023 earnings has moved 0.9% north in the past 30 days. This should instill investors’ confidence in the stock.

Earnings Surprise History

Brighthouse has a solid track record of beating earnings estimates in six of the last seven quarters.

Zacks Rank & Price Performance

Brighthouse currently carries a Zacks Rank #3 (Hold). In the past year, the stock has lost 2.2% compared with the industry’s decline of 15.1%.

Zacks Investment Research
Image Source: Zacks Investment Research

Business Tailwinds

The Zacks Consensus Estimate for Brighthouse’s 2023 earnings per share is pegged at $13.88, indicating an increase of 36% from the corresponding year-ago reported figure.

Brighthouse remains well poised for growth with solid performances by the Annuities, Life and Run-off segments.

Riding on fixed deferred annuities and Shield Level Annuities, total annuity sales are likely to increase.

Brighthouse remained focused on enhancing the product portfolio with the launch of Shield Level Pay Plus. The product is designed to strengthen clients’ retirement portfolios by providing a stream of guaranteed lifetime income. It will also offer them opportunities to participate in market growth combined with a level of protection against market volatility.

The Run-off segment is likely to gain on the back of higher net investment income and a higher underwriting margin.

Riding on higher alternative investment income, a well-diversified and high-quality portfolio as well as a conservative investment strategy, Brighthouse’s adjusted net investment income is expected to improve.

Brighthouse’s capitalization remained strong with an estimated combined risk-based capital or RBC ratio between 450% and 470%. BHF continues to target an RBC ratio between 400% and 450% in normal markets.

A solid statutory balance sheet and sufficient cash continue to support the repurchase strategy. Currently, it has $386 million remaining under its share repurchase authorization.

Stocks to Consider

Some better-ranked stocks from the insurance industry are Reinsurance Group of America, Incorporated (RGA Free Report) , W.R. Berkley Corporation (WRB Free Report) and Root, Inc. (ROOT Free Report) , each carrying Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The Zacks Consensus Estimate for Reinsurance Group’s 2022 and 2023 earnings has moved 4.7% and 0.4% north, respectively, in the past 30 days. In the past year, Reinsurance Group stock has gained 29.8%.

The Zacks Consensus Estimate for RGA’s 2022 and 2023 earnings per share indicates a year-over-year increase of 1,224.7% and 3.4%, respectively.

The bottom line of W.R. Berkley surpassed earnings estimates in each of the last four quarters, the average beat being 25.63%. In the past year, the insurer has gained 37.3%.

The Zacks Consensus Estimate for W.R. Berkley’s 2022 and 2023 earnings has moved 5.1% and 3.4% north, respectively, in the past 60 days.

Root delivered a trailing four-quarter average earnings surprise of 22.44%. In the past year, ROOT has lost 91.5%.

The Zacks Consensus Estimate for ROOT’s 2022 and 2023 earnings indicates a respective year-over-year increase of 44.7% and 23.9%.

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