What's Next for Aflac Stock After Earnings?

A recent survey from the insurance company indicates an increase in health benefit purchases

Oct 29, 2021 at 2:20 PM

Aflac Incorporated (NYSE: AFL) is an American insurance company and the largest provider of supplemental insurance in the United States. AFL provides protection to more than 50 million people through its subsidiaries in Japan and the United States.

On Monday, Oct. 18, Aflac released data from a survey recently conducted, which found that life insurance is the top new health benefit added to health coverage plans. According to the 2021 Aflac WorkForces Report, 44% of all U.S. employees purchased at least one new health benefit in response to the Covid-19 pandemic, with half of those specifically adding life insurance. Roughly, one-third of people said they purchased critical illness, hospital indemnity, telehealth services, or mental health resources.

The company is also coming off its third-quarter earnings release, announced after the close on Wednesday, Oct. 27, in which it shared profits of $1.53 per share, which topped analysts' expectations. The firm's revenue of $5.24 billion, meanwhile, missed the mark. The company said it continues to see improvement in its U.S. markets "whereas in Japan pandemic conditions were more challenging."

Aflac stock has increased about 57% in price year-over-year and have grown 21% year-to-date. The stock has cooled since touching a record high of $57.66 just before its earnings report, though long-term support at the 200-day moving average could keep some of these losses in check. Aflac Incorporated also offers a forward dividend of $1.32 and a dividend yield of 2.38%.

afl chart oct 29

Nonetheless, Aflac stock’s valuation continues to be very attractive given the insurance company’s recent history of bottom-line growth. Aflac’s net income has grown 99% since fiscal 2018 and 21.5% since fiscal 2020. However, AFL's revenues only increased 6% during the same period, with the company also experiencing a small decline in sales for fiscal 2020. From a fundamental point of view, Aflac stock still has potential as a long-term value and dividend play, despite AFL hanging near its all-time highs.

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