Aflac (AFL) Down 2% Since Last Earnings Report: Can It Rebound?

A month has gone by since the last earnings report for Aflac (AFL). Shares have lost about 2% in that time frame, underperforming the S&P 500.Will the recent negative trend continue leading up to its next earnings release, or is Aflac due for a breakout? Well, first let's take a quick look at the latest earnings report in order to get a better handle on the recent drivers for Aflac Incorporated before we dive into how investors and analysts have reacted as of late.Aflac Q3 Earnings Beat Estimates on Strong Group Life SalesAflac Incorporated reported third-quarter 2025 adjusted earnings per share (EPS) of $2.49, which outpaced the Zacks Consensus Estimate by 38.3%. The bottom line improved 15.3% year over year.Adjusted revenues came in at $4.7 billion, which surged 60.7% year over year. The top line beat the consensus mark by 5.6%.The quarterly results gained on strong investment income and improved U.S. segment performance, supported by higher sales of group life and disability products. The solid sales of Miraito also bolstered Japan’s new premium sales. However, the upside was partly offset by rising acquisition and operating expenses.AFL’s Q3 PerformanceAdjusted net investment income advanced 7.7% year over year to $1 billion in the quarter under review. Total net benefits and claims came in at $1.4 billion, which declined 10% year over year. Total acquisition and operating expenses increased 3.8% year over year to $1.3 billion. Pre-tax earnings increased nearly 22-fold year over year to $2 billion.Inside Aflac’s SegmentsAflac Japan: The segment’s adjusted revenues dipped 1.8% year over year to $2.3 billion in the third quarter and fell short of the Zacks Consensus Estimate of $2.4 billion. Net earned premiums of $1.66 billion slipped 2.7% year over year and missed the consensus mark of $1.73 billion.  Adjusted net investment income inched up 0.5% year over year to $665 million. The unit’s pre-tax adjusted earnings came in at $1.2 billion, which rose 13.3% year over year and surpassed the consensus mark of $814 million. New annualized premium sales advanced 11.8% year over year to $133 million on the back of solid sales of Miraito, its cancer insurance product. Aflac U.S.: Adjusted revenues of $1.73 billion grew 2.6% year over year but marginally missed the Zacks Consensus Estimate of $1.75 billion. Total net earned premiums advanced 2.5% year over year to $1.5 billion, attributable to higher sales. The metric marginally missed the consensus mark of $1.52 billion. Adjusted net investment income came in at $214 million, which inched up 1.9% year over year in the quarter under review. Pretax adjusted earnings of the segment improved 7.1% year over year to $375 million on the back of improved premiums and lower benefits. The metric beat the consensus mark of $344 million. The unit’s sales totaled $390 million, which grew 2.8% year over year, resulting from higher sales of group life and disability products.Financial Position (As of Sept. 30, 2025)Aflac exited the third quarter with total cash and cash equivalents of $6.8 billion, which rose 8.7% from the 2024-end level. Total assets of $122.3 billion increased 4% from the figure at 2024-end. Adjusted debt came in at $8 billion, up 10.7% from the figure as of Dec. 31, 2024. Adjusted debt to adjusted capitalization, excluding accumulated other comprehensive income, came in at 22%, which deteriorated 230 basis points (bps) from the 2024-end level. While the company has no debt maturities in less than a year, total debt maturities worth $3.3 billion are expected within the next five years.Total shareholders' equity of $28.7 billion advanced 9.9% from the 2024-end figure.Adjusted book value per share increased 4.1% year over year to $53.33. Adjusted return on equity, excluding foreign currency impacts, was 22.1%, which improved 190 bps year over year.AFL’s Capital DeploymentAflac bought back 9.3 million shares worth $1 billion in the third quarter. It had 121.6 million shares left for buyback as of Sept. 30, 2025. Management announced dividends of 58 cents per share for the fourth quarter. The dividend will be paid out on Dec.1, 2025, to shareholders of record as of Nov. 19.AFL’s 2025 OutlookAflac currently anticipates a benefit ratio of 58-60% for the Aflac Japan unit in 2025, compared with the earlier guidance of 64-66%. The metric for the Aflac U.S. unit continues to be projected within 48-52% and is likely to stay at the lower end of the estimated range. The expense ratio for Aflac Japan is reiterated to be 20-23%. The metric is likely to stay at the lower end of the estimated range for 2025. The same for Aflac U.S. is reiterated within 36-39% and is projected to stay at the mid to upper end of the expected range.Underlying earned premiums are likely to witness a year-over-year decline of 1-2% for the Japan unit in 2025. The pretax profit margin for Aflac Japan is estimated at 35-38%, compared with the previous view of 30-33%. The same for Aflac U.S. continues to be estimated at 17-20% for 2025 and is anticipated to stay at the upper end of the range.How Have Estimates Been Moving Since Then?In the past month, investors have witnessed a upward trend in estimates review.VGM ScoresCurrently, Aflac has a subpar Growth Score of D, however its Momentum Score is doing a lot better with a B. Charting a somewhat similar path, the stock has a score of C on the value side, putting it in the middle 20% for this investment strategy.Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.OutlookEstimates have been trending upward for the stock, and the magnitude of these revisions looks promising. Interestingly, Aflac has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.Zacks' Research Chief Picks Stock Most Likely to "At Least Double"Our experts have revealed their Top 5 recommendations with money-doubling potential – and Director of Research Sheraz Mian believes one is superior to the others. Of course, all our picks aren’t winners but this one could far surpass earlier recommendations like Hims & Hers Health, which shot up +209%.See Our Top Stock to Double (Plus 4 Runners Up) >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Aflac Incorporated (AFL): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks