Supplemental health and life insurer Aflac Inc. AFL is scheduled to release fourth-quarter 2015 financial results after the closing bell on Feb 1.
Last quarter, this health insurer delivered a 5.4% positive earnings surprise, and the average beat for the trailing four quarters is 0.86%.
Will Aflac deliver a positive earnings surprise this quarter? Let's see what factors might have influenced the earnings report this time around.
Factors Influencing This Past Quarter
Aflac's earnings will be somewhat challenged by the low interest rate environment. A strong dollar and consequently a weakening yen will restrict the company’s earnings from its Japan business.
Earnings will, however, see increased sales in the U.S. given a higher proportion of sales through brokers and large employers in the fourth quarter.
Also, higher Japan third sector sales expected for the fourth quarter will push up the top line from Japan.
The company’s share buyback activity will also lift its bottom line.
The company guided fourth-quarter earnings in the range of $1.36 to $1.56 and full-year 2015 EPS of $5.96 to $6.16.
Earnings Whispers
Our proven model does not conclusively show that Aflac is likely to beat the Zacks Consensus Estimate in the fourth quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy) or at least 2 (Buy) or 3 (Hold) for this to happen. But this is not the case here as elaborated below.
Zacks ESP: Aflac’s Most Accurate estimate is pegged at $1.48 per share, which is same as the Zacks Consensus Estimate. The Earnings ESP is thus 0.00%.
Zacks Rank: Aflac has a Zacks Rank #3. Though a favorable Zacks Rank increases the predictive power of ESP, the company’s 0.00% ESP leaves our surprise prediction inconclusive.
Stocks to Consider
Here are some companies you may want to consider as these have the right combination of elements to post an earnings beat this quarter:
American Financial Group Inc. AFG has an Earnings ESP of +0.63% and a Zacks Rank #3. The company is scheduled to release fourth-quarter earnings results on Feb 2.
The Hartford Financial Services Group, Inc. HIG has an Earnings ESP of +2.04% and a Zacks Rank #2. The company is scheduled to release fourth-quarter earnings results on Feb 4.
Arch Capital Group Ltd. ACGL has an Earnings ESP of +1.85% and a Zacks Rank #3. The company is scheduled to release fourth-quarter earnings results on Feb 9.
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