December 7, 2022

Reinsurance Group (RGA) Announces Fourth Quarter Loss, Exceeds Earnings Estimates

This story originally appeared on Zacks

Reinsurance Group (RGA) exited with a quarterly loss of $0.56 per share against Zacks consensus estimate of $0.83. That compares to earnings of $1.19 per share a year ago. These figures are adjusted for non-recurring items.

– Zacks

This quarterly report represents a profit surprise of -167.47%. A quarter ago, this reinsurance company was expected to post a profit of $2.45 per share when it actually produced a loss of $1.11, delivering a surprise of -145, 31%.

In the past four quarters, the company has exceeded consensus EPS estimates only once.

Reinsurance group, which is part of the Zacks Insurance – Life Insurance segment, posted revenue of $4.27 billion for the quarter ended December 2021, beating Zacks’ consensus estimate by 2.13%. That compares to revenues of $4.04 billion a year ago. The company has exceeded consensus revenue estimates four times in the past four quarters.

The sustainability of the immediate stock price movement based on recently released numbers and future earnings forecasts will primarily depend on management’s comments on the earnings call.

Shares of the reinsurance group have gained about 3.9% year-to-date versus a -3.7% drop for the S&P 500.

What is the next step for the reinsurance group?

With Reinsurance Group outperforming the market so far this year, the question on investors’ minds is: what’s next for the stock?

There are no easy answers to this key question, but one reliable metric that can help investors answer it is the company’s earnings outlook. This includes not only current consensus earnings expectations for the upcoming quarter(s), but also how those expectations have changed recently.

Empirical research shows a strong correlation between short-term stock movements and trends in earnings estimate revisions. Investors can track these revisions on their own or rely on a proven scoring tool like Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions.

Before this publication of the results, the trend of revisions of estimates for the reinsurance group is mixed. While the magnitude and direction of estimate revisions may change following the release of the company’s earnings report, the current situation translates into a No. 3 (hold) Zacks ranking for the stock. Thus, the shares should move in line with the market in the near future. You can see the full list of today’s Zacks #1 Rank (Strong Buy) stocks here.

It will be interesting to see how the estimates for the next few quarters and the current fiscal year change in the days ahead. The current consensus EPS estimate is $1.37 on $3.95 billion in revenue for the upcoming quarter and $11.33 on $16.36 billion in revenue for the current fiscal year.

Investors should be aware that the outlook for the sector can also have a significant impact on stock performance. In terms of Zacks industry rankings, insurance – life insurance currently sits in the bottom 31% of over 250 Zacks industries. Our research shows that the top 50% of industries ranked by Zacks outperform the bottom 50% by a factor of more than 2 to 1.

Voya Financial (VOYA), another stock in the same sector, has yet to report its results for the quarter ending December 2021. The results are expected to be released on February 8.

This pension, investment and insurance company is expected to post quarterly earnings of $1.48 per share in its next report, representing a year-over-year change of +2.8%. The consensus EPS estimate for the quarter has been revised down 1.8% in the last 30 days from the current level.

Voya Financial’s revenue is expected to be $233.58 million, down 41.3% from the year-ago quarter.

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