AFLAC Earnings: Here’s Why Shares are Down Now

AFLAC Inc. (NYSE:AFL) delivered a profit and beat Wall Street’s expectations, AND beat the revenue expectation. The revenue beat is a positive sign to shareholders seeking high growth out of the company. Shares are down 0.16%.

AFLAC Inc. Earnings Cheat Sheet

Results: Adjusted Earnings Per Share increased 0.62% to $1.62 in the quarter versus EPS of $1.61 in the year-earlier quarter.

Revenue: Rose 2.41% to $6.04 billion from the year-earlier quarter.

Actual vs. Wall St. Expectations: AFLAC Inc. reported adjusted EPS income of $1.62 per share. By that measure, the company beat the mean analyst estimate of $1.51. It beat the average revenue estimate of $5.83 billion.

Quoting Management: Chairman and Chief Executive Officer Daniel P. Amos stated: “Aflac Japan’s financial results were strong for the quarter, although they were masked by a substantially weaker yen. As anticipated, Aflac Japan’s overall sales were down significantly in the second quarter. This was primarily the result of two factors: the repricing of WAYS and other first sector products, reflecting lower assumed interest rates; and improved investment returns for equities and fixed-income investments, which caused customers at banks to shift their focus from WAYS-type insurance products to investment trusts. Keep in mind, however, our sales target and focus is centered around the sale of Aflac Japan’s third sector products, including cancer and medical. While third sector sales were down in the second quarter as expected, we continue to believe consumer response to our third sector products will be strong in the second half of 2013, particularly the fourth quarter, in large part due to the new medical product we’ll be introducing in August. Therefore, we continue to believe Aflac Japan’s sales of third sector products will be flat to up 5% for the full year. As we look ahead, I am very pleased with the new agreement Aflac Japan signed with the Japan Post group last week. This new agreement enhances our distribution and allows us to reach new consumers with our cancer insurance products.”

Key Stats (on next page)…

Revenue decreased 2.64% from $6.21 billion in the previous quarter. EPS decreased 4.14% from $1.69 in the previous quarter.

Looking Forward: Analysts have a more negative outlook for the company’s next-quarter performance. Over the past three months, the average estimate for next quarter’s earnings has fallen from a profit of $1.54 to a profit $1.53. For the current year, the average estimate is a profit of $6.18, which is the same with that ninety days ago.

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(Company fundamentals provided by Xignite Financials. Email any earnings discrepancies to earnings [at] wallstcheatsheet.com)