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AFLAC (AFL)
NYSE:AFL
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AFLAC
(NYSE:AFL)
74Outperform
Positive Factors
Capital Position
AFL's capital position remains strong, with significant buybacks and liquid assets above targets.
Earnings
AFL is expected to perform better than consensus expectations.
Negative Factors
Financial Performance
AFL's 4Q:24 operating EPS and sales growth in Japan and the US missed expectations, raising concerns about its high P/E ratio.
Market Dynamics
Continued growth headwinds are likely given competitive/secular dynamics in AFL's Japan and U.S. markets.
Sales Growth
Sales growth in AFL Japan was significantly lower than expected, particularly due to weaker cancer product sales.
AFLAC (AFL) vs. S&P 500 (SPY)
Market Cap
$60.99B
Dividend Yield1.86%
Average Volume (3M)2.12M
Price to Earnings (P/E)11.6
Beta (1Y)0.46
Revenue Growth1.21%
EPS Growth24.08%
CountryUS
Employees12,694
SectorFinancial
Sector Strength78
IndustryInsurance - Life
Share Statistics
EPS (TTM)9.61
Shares Outstanding545,814,600
10 Day Avg. Volume2,280,623
30 Day Avg. Volume2,120,347
Financial Highlights & Ratios
PEG Ratio0.48
Price to Book (P/B)N/A
Price to Sales (P/S)3.11
Price to Cash Flow (P/CF)44.40
P/FCF Ratio39.40
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$105.92Price Target Upside3.86% Upside
Rating ConsensusHold
Number of Analyst Covering13
AFLAC Business Overview & Revenue Model
Company DescriptionAflac Incorporated (AFL) is a leading provider of supplemental insurance products in the United States and Japan. The company primarily operates in the life and health insurance sectors, offering a range of coverage options including cancer, critical illness, accident, disability, dental, and vision insurance. Aflac is renowned for its innovative approach to insurance and its iconic duck mascot, which is central to its branding efforts. Established in 1955, Aflac's mission is to provide customers with financial protection and peace of mind through its comprehensive insurance solutions.
How the Company Makes MoneyAflac makes money primarily through the sale of supplemental insurance products. The company generates revenue by collecting premiums from policyholders, which form the core of its income. Aflac's key revenue streams include premiums from its life and health insurance offerings, particularly in Japan and the United States. In Japan, Aflac is a leader in the cancer and medical insurance markets, while in the U.S., it focuses on individual and group insurance products. The company also invests the premiums received in a diversified portfolio of assets, which contributes to its income through investment gains. Partnerships with employers and brokers play a significant role in distributing Aflac's products, allowing the company to reach a broad customer base and enhance its sales channels. Aflac's financial strength is bolstered by its strategic risk management practices and its ability to adapt to changing market conditions.
AFLAC Financial Statement Overview
Summary
AFLAC exhibits robust financial health with strong profitability, a solid balance sheet devoid of debt, and healthy cash flows. Despite inconsistent revenue growth, the company maintains strong margins and cash generation, with high equity levels providing stability in the insurance sector.Income Statement
AFLAC has demonstrated strong profitability with a high net profit margin, notably increasing from 2023 to 2024. However, the revenue growth has been inconsistent, with a significant drop in 2024 compared to previous years. Despite this, EBIT margins have remained robust, indicating effective cost management. The absence of EBITDA data for 2024 affects a comprehensive margin analysis.75
Positive
Balance Sheet
AFLAC maintains a solid balance sheet with no total debt in 2024, leading to a very strong debt-to-equity position. The company shows a high equity ratio, indicating financial stability and a strong buffer against liabilities. Return on equity has been strong, benefiting from high net income levels.85
Very Positive
Cash Flow
The cash flow situation is healthy, with a significant increase in operating cash flow in 2024. The free cash flow has also grown substantially, reflecting efficient cash management. The company exhibits a strong operating cash flow to net income ratio, suggesting effective conversion of income into cash. However, fluctuations in financing cash flows indicate potential volatility in cash management strategies.80
Positive
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 19.13B | 18.84B | 19.15B | 21.55B | 22.26B | Gross Profit |
| 19.13B | 18.84B | 19.15B | 21.55B | 22.26B | EBIT |
| 6.42B | 5.26B | 4.87B | 5.21B | 4.16B | EBITDA |
| 6.42B | 5.26B | 4.87B | 5.21B | 4.16B | Net Income Common Stockholders |
| 5.44B | 4.66B | 4.42B | 4.23B | 4.78B |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 4.02B | 28.22B | 79.68B | 103.75B | 111.02B | Total Assets |
| 117.57B | 126.72B | 131.74B | 157.54B | 165.09B | Total Debt |
| 7.50B | 7.36B | 7.44B | 7.96B | 7.90B | Net Debt |
| 1.27B | 3.06B | 3.50B | 2.90B | 2.76B | Total Liabilities |
| 91.47B | 104.74B | 111.60B | 7.96B | 7.90B | Stockholders Equity |
| 26.10B | 21.98B | 20.14B | 33.25B | 33.56B |
| Cash Flow | Free Cash Flow | |||
| 2.71B | 3.19B | 3.88B | 5.05B | 5.96B | Operating Cash Flow |
| 2.71B | 3.19B | 3.88B | 5.05B | 5.96B | Investing Cash Flow |
| 2.78B | 817.00M | -1.54B | -2.38B | -4.62B | Financing Cash Flow |
| -3.49B | -3.72B | -3.55B | -2.74B | -1.11B |
AFLAC Technical Analysis
Negative
101.98
Price Trends
106.79
Negative
106.25
Negative
104.18
Negative
Market Momentum
1.42
Negative
66.12
Neutral
83.30
Negative
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For AFL, the sentiment is Negative. The current price of 101.98 is below the 20-day moving average (MA) of 108.56, below the 50-day MA of 106.79, and below the 200-day MA of 104.18, indicating a bearish trend. The MACD of 1.42 indicates Negative momentum. The RSI at 66.12 is Neutral, neither overbought nor oversold. The STOCH value of 83.30 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for AFL.
AFLAC Risk Analysis
AFLAC disclosed 28 risk factors in its most recent earnings report. AFLAC reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
AFLAC Peers Comparison
Overall Rating
UnderperformOutperform
Sector (63)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
77 Outperform | $10.61B | 10.68 | 21.87% | 0.82% | 6.07% | 17.69% | |
75 Outperform | $12.58B | 7.52 | 17.26% | 2.28% | 4.03% | 45.42% | |
74 Outperform | $60.99B | 11.60 | 22.64% | 1.86% | 1.21% | 24.08% | |
67 Neutral | $5.11B | 1.63 | 43.24% | 5.40% | 47.95% | ― | |
65 Neutral | $51.71B | 12.77 | 15.41% | 3.16% | 6.10% | 225.22% | |
63 Neutral | $12.86B | 9.17 | 9.16% | 4.78% | 16.41% | -10.10% | |
61 Neutral | $37.10B | 13.97 | 9.79% | 5.44% | 34.25% | 11.22% |
* Financial Sector Average
Performance Comparison
AFL
AFLAC
101.98
18.58
22.28%
LNC
Lincoln National
29.97
0.82
2.81%
MET
Metlife
69.07
-2.59
-3.61%
PRU
Prudential Financial
96.53
-13.93
-12.61%
GL
Globe Life
117.22
10.38
9.72%
UNM
Unum Group
71.17
19.33
37.29%
AFLAC Earnings Call Summary
Earnings Call Date: Feb 5, 2025 | % Change Since: -4.41% | Next Earnings Date: Apr 30, 2025
Earnings Call Sentiment Positive
The earnings call reflected a strong overall performance with significant earnings growth and capital returns to shareholders. However, challenges were noted in the US sales, particularly in the dental segment, and in Japan's net earned premiums. The commercial real estate market also posed difficulties.Highlights
Strong Earnings Growth
Aflac Incorporated delivered strong earnings with net earnings per diluted share up 23.8% to $9.63 and adjusted earnings per diluted share up 15.7% to $7.21.
Aflac Japan's Performance
Aflac Japan represented more than 70% of pretax adjusted earnings and achieved a 15.5% increase in pretax adjusted earnings with a record 36% pretax profit margin.
Capital Deployment and Shareholder Returns
Aflac repurchased $2.8 billion worth of shares and delivered $3.9 billion back to shareholders in 2024, marking 42 consecutive years of dividend growth.
Improved Premium Persistency in the US
Aflac US achieved a 70 basis point improvement in premium persistency to 79.3%.
Strong Capital Position
Strong capital ratios with an SMR above 1150%, ESR above 270%, and combined RBC estimated to be greater than 650%.
Lowlights
Decline in US Sales
US sales were lower than expected in the fourth quarter, leading to a 1% decline for the year.
Challenges in the Dental Segment
A 33% decline in dental sales in Q4 due to a failed system implementation affecting trust with brokers and agents.
Japan's Decline in Net Earned Premiums
Net earned premiums for the Japan segment declined 5.4% due to internal reinsurance transactions and paid-up policies.
Commercial Real Estate Challenges
Increased CECL reserve by $40 million due to distressed property valuations and foreclosure on two loans.
Company Guidance
During the Aflac Incorporated Fourth Quarter 2024 Earnings Conference Call, the company provided detailed guidance and metrics for both its Japan and U.S. segments. Aflac reported a 23.8% increase in net earnings per diluted share to $9.63 and a 15.7% increase in adjusted earnings per diluted share to $7.21. The Japan segment, which represented more than 70% of pretax adjusted earnings, experienced a 15.5% rise in pretax adjusted earnings and a record pretax profit margin of 36%. The U.S. segment saw a 2.7% increase in net earned premiums with a pretax profit margin of 21.1%. The company repurchased over 30 million shares, totaling $2.8 billion in capital deployment, and maintained a 42-year streak of dividend growth, delivering $3.9 billion back to shareholders in 2024. For 2025, Aflac anticipates Japan's pretax profit margin to be at the lower end of the 30-33% range, while in the U.S., it expects a benefit ratio at the lower end of the 48-52% range and an expense ratio at the upper end of the 36-39% range.AFLAC Corporate Events
Stock BuybackDividendsBusiness Operations and StrategyFinancial Disclosures
Aflac Faces Q3 Losses Amid Strategic Adjustments
Negative
Oct 30, 2024
Aflac Incorporated experienced a challenging third quarter with net losses of $93 million due to foreign exchange-related issues, despite a 10.6% increase in adjusted earnings. Aflac Japan saw a 10.5% decline in net earned premiums, while Aflac U.S. reported a 2.8% rise, driven by improved sales. The company has focused on introducing new products in both markets, aiming to create long-term value for shareholders. Aflac also announced a $0.50 per share dividend and repurchased $500 million of its common shares.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.