Is AFLAC a Winner in the Insurance Industry?

NYSE: AFL | AFLAC Incorporated  News, Ratings, and Charts

AFL – Fortune 500 company insurance Aflac (AFL) recently reported impressive second-quarter earnings results. However, can the stock maintain its business momentum amid uncertainty associated with emerging COVID-19 variants? Let’s find out. Read on.

Leading supplemental insurer Aflac Incorporated (AFL), which is headquartered in Columbus, Ga., is currently trading 3.2% below its 52-week price high of $57.64, which it hit on August 16, 2021. Also, on September 10, AM Best assigned indicative Long-Term Issue Credit Ratings of ‘a-’ (Excellent) to senior unsecured issues and ‘bbb+’ (Good) to subordinated issues in AFL’s recently filed shelf registration.

The stock has gained 52.9% in price over the past year to close yesterday’s trading session at $56.49. 

However, AFL recently witnessed a decline in hedge fund sentiment. Furthermore, the continued spread of the Delta coronavirus variant makes the company’s near-term prospects uncertain because its profitability could be significantly impacted.

Here’s what could influence AFL’s performance in the coming months:

Solid Financials

AFL’s total revenues surged 2.9% year-over-year to $5.56 billion for the fiscal second quarter ended June 30, 2021. In addition, its adjusted net investment income grew 15.2% year-over-year to $983 million. Its adjusted earnings came in at $1.08 billion, representing a 17.3% year-over-year increase. Also, its adjusted EPS came in at $1.59, up 24.2% year-over-year.

Reasonable Valuation

In terms of forward P/S, AFL’s 1.72x is 49.6% lower than the 3.42x industry average. Likewise, its 1.97x forward EV/S is 39% lower than the 3.23x industry average. Furthermore, the stock’s forward P/CF and non-GAAP P/E of 8.09x and 9.84x, respectively, are lower than the 11.05x and 11.61x industry averages.

Unfavorable Analyst Estimates

Analysts expect AFL’s revenue to decrease 10.4% for the quarter ending December 31, 2021, 1.6% this year, and 3.3% next year. Also, the company’s EPS is expected to decline 8.3% year-over-year to $5.20 in its fiscal year 2022.

Poor Profitability

In terms of trailing-12-month net income margin, AFL’s 39.95% is 37.3% lower than the 63.72% industry average. Likewise, its 11.05% trailing-12-month levered FCF margin is 45.7% lower than the 20.34% industry average. And the stock’s 0.14% trailing-12-month asset turnover ratio is 27.8% lower than the 0,20% industry average.

POWR Ratings Reflect Uncertainty

AFL has an overall C rating, which equates to a Neutral in our POWR Ratings system. The POWR Ratings are calculated by considering 118 distinct factors, with each factor weighted to an optimal degree. 

Our proprietary rating system also evaluates each stock based on eight distinct categories. AFL has a C grade for Quality, which is in sync with its lower-than-industry profitability ratios.

Furthermore, the stock has a D grade for Growth, and a C grade for Sentiment, consistent with unfavorable analyst sentiment.

AFL is ranked #5 of 10 stocks in the Insurance – Accident & Supplemental industry. Click here to access AFL’s ratings for Value, Momentum, and Stability as well.

Bottom Line

While AFL reported impressive earnings results for the second quarter of 2021, its near-term prospects look uncertain. Therefore, we think it could be wise to wait for a better entry point in the stock.

How Does Aflac (AFL) Stack Up Against its Peers?

While AFL has an overall POWR Rating of C, one  might want to consider investing in Insurance – Accident & Supplemental stocks with a B (Buy) rating, such as Triple-S Management Corporation Class B (GTS) and Assurant, Inc (AIZ).

Want More Great Investing Ideas?

3 Stocks to DOUBLE This Year


AFL shares were trading at $56.44 per share on Wednesday afternoon, up $0.65 (+1.17%). Year-to-date, AFL has gained 29.31%, versus a 22.20% rise in the benchmark S&P 500 index during the same period.


About the Author: Nimesh Jaiswal


Nimesh Jaiswal's fervent interest in analyzing and interpreting financial data led him to a career as a financial analyst and journalist. The importance of financial statements in driving a stock’s price is the key approach that he follows while advising investors in his articles. More...


More Resources for the Stocks in this Article

TickerPOWR RatingIndustry RankRank in Industry
AFLGet RatingGet RatingGet Rating
GTSGet RatingGet RatingGet Rating
AIZGet RatingGet RatingGet Rating

Most Popular Stories on StockNews.com


Stock Market Alert: History Repeating Itself?

The last time we played around with tariffs was back in 2018 when we started a trade war with China. To say the least that was very negative for stocks as the S&P 500 (SPY) tanked the second half of the year. We need to learn from those history lessons to chart our course for investing in 2025. Read on for more...

3 Renewable Fuel Stocks With Big Potential

The renewable fuel sector is leading the global energy transition, driven by significant government initiatives that have accelerated the adoption of clean energy and fueled remarkable growth in recent years. So, investing in fundamentally stable renewable fuel stocks Vistra Corp. (VST), Duke Energy (DUK), and American Electric Power (AEP) could be a wise move for investors. Read on...

American Airlines (AAL) vs. Alaska Air Group (ALK): Which Airline Stock Is Set to Soar Higher?

The adoption of advanced technology and surging air travel demand are brightening the prospects for the airline industry. To analyze which airline stock is set to soar higher, let’s compare American Airlines Group (AAL) and Alaska Air Group (ALK). Read on to find out…

3 Warren Buffett Stocks That Are Smart Buys Now

Warren Buffett’s investment strategy has stood the test of time, delivering remarkable returns for decades. Currently, his portfolio includes Visa (V), VeriSign (VRSN), and DaVita (DVA) shares, which reflects his confidence in the long-term growth potential of these companies. So, could they be smart buys right now? Read on to find out…

Fade THIS Stock Market Rally

We all cheer when the S&P 500 (SPY) makes new highs as it did last week. Unfortunately the stars are aligning for more market downside in the near term. Get the full story now...

Read More Stories

More AFLAC Incorporated (AFL) News View All

Event/Date Symbol News Detail Start Price End Price Change POWR Rating
Loading, please wait...
View All AFL News