Results: Aflac Incorporated Exceeded Expectations And The Consensus Has Updated Its Estimates

A week ago, Aflac Incorporated (NYSE:AFL) came out with a strong set of first-quarter numbers that could potentially lead to a re-rate of the stock. It was overall a positive result, with revenues beating expectations by 2.7% to hit US$5.3b. Aflac also reported a statutory profit of US$1.58, which was an impressive 20% above what the analysts had forecast. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.

View our latest analysis for Aflac

Taking into account the latest results, the current consensus, from the nine analysts covering Aflac, is for revenues of US$19.9b in 2022, which would reflect a perceptible 7.7% reduction in Aflac's sales over the past 12 months. Statutory earnings per share are forecast to drop 17% to US$5.22 in the same period. In the lead-up to this report, the analysts had been modelling revenues of US$20.2b and earnings per share (EPS) of US$5.06 in 2022. The analysts seems to have become more bullish on the business, judging by their new earnings per share estimates.

There's been no major changes to the consensus price target of US$62.31, suggesting that the improved earnings per share outlook is not enough to have a long-term positive impact on the stock's valuation. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. Currently, the most bullish analyst values Aflac at US$69.00 per share, while the most bearish prices it at US$54.00. This is a very narrow spread of estimates, implying either that Aflac is an easy company to value, or - more likely - the analysts are relying heavily on some key assumptions.

Of course, another way to look at these forecasts is to place them into context against the industry itself. These estimates imply that sales are expected to slow, with a forecast annualised revenue decline of 10% by the end of 2022. This indicates a significant reduction from annual growth of 0.2% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 3.8% per year. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Aflac is expected to lag the wider industry.

The Bottom Line

The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards Aflac following these results. On the plus side, there were no major changes to revenue estimates; although forecasts imply revenues will perform worse than the wider industry. The consensus price target held steady at US$62.31, with the latest estimates not enough to have an impact on their price targets.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. At Simply Wall St, we have a full range of analyst estimates for Aflac going out to 2024, and you can see them free on our platform here..

Don't forget that there may still be risks. For instance, we've identified 2 warning signs for Aflac that you should be aware of.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.