A month has gone by since the last earnings report for Brighthouse Financial (BHF). Shares have added about 1.2% in that time frame, underperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Brighthouse Financial due for a pullback? 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 Miss, Revenues Top Estimates

Brighthouse Financial reported fourth-quarter 2023 adjusted net income of $2.92 per share, which missed the Zacks Consensus Estimate by 23.8%. The bottom line declined 16.8% year over year.

The results reflected higher revenues offset by higher expenses.

Behind the Headlines

Total operating revenues of $2.1 billion increased 5.4% year over year, driven by higher premiums, net investment income and other income. The top line beat the consensus mark by 0.2%.

Premiums of $226 million increased 35.5% year over year.

Adjusted net investment income was $1.2 billion in the quarter under review, up 13.3% year over year, primarily driven by alternative investment income, asset growth and higher interest rates. The investment income yield was 4.16%.

Total expenses were $2.6 million. Corporate expenses, pretax, were $224 million, a slight increase from $243 million incurred in the year ago quarter.

Quarterly Segmental Update

Annuities recorded an adjusted operating income of $245 million, up 26.3% year over year, attributable to lower fees, higher expenses and a lower underwriting margin. Annuity sales decreased 8% to $2.7 billion, attributable to lower fixed deferred annuity sales, partially offset by strong Shield Annuity sales.

Life’s adjusted operating income was $4 million, down 76.5% year over year. The year-over-year deterioration was due to a lower underwriting margin, partially offset by higher net investment income and lower expenses. Life insurance sales increased 28% to $29 million.

Adjusted operating loss at Run-off was $50 million against the year-ago income of $236 million, reflecting lower underwriting margin, partially offset by higher net investment income.

Corporate & Other incurred an adjusted operating loss of $22 million against the year-ago income of $98 million, reflecting lower tax benefits and higher expenses.



Financial Update

Cash and cash equivalents were $3.8 billion, down 6.4% year over year.

Shareholders’ equity of $4.9 billion at the end of 2023 decreased 10.7% year over year.

Book value per share, excluding accumulated other comprehensive income, was $133.69 as of Dec 31, 2023, down 8.2% year over year.

Statutory combined total adjusted capital was $6.3 billion as of Dec 31, 2023, down 22.2% year over year.

As of Dec 31, 2023, the estimated combined risk-based capital ratio was 420%.

Share Buyback Program

Brighthouse bought back shares worth $250 million in 2023, with another $30 million through Feb 9, 2024. The company has about $763 million remaining under its current share repurchase authorizations.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in estimates revision.

VGM Scores

At this time, Brighthouse Financial has a poor Growth Score of F, a grade with the same score on the momentum front. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of D. 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 these revisions indicates a downward shift. It's no surprise Brighthouse Financial has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.

Performance of an Industry Player

Brighthouse Financial belongs to the Zacks Insurance - Life Insurance industry. Another stock from the same industry, Sun Life (SLF), has gained 5.8% over the past month. More than a month has passed since the company reported results for the quarter ended December 2023.

Sun Life reported revenues of $13.73 billion in the last reported quarter, representing a year-over-year change of +51.5%. EPS of $1.23 for the same period compares with $1.25 a year ago.

Sun Life is expected to post earnings of $1.20 per share for the current quarter, representing a year-over-year change of +7.1%. Over the last 30 days, the Zacks Consensus Estimate has changed +0.2%.

The overall direction and magnitude of estimate revisions translate into a Zacks Rank #2 (Buy) for Sun Life. Also, the stock has a VGM Score of B.

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