Aflac: Valued For ~14% Annual RoR, And A 'Buy'

Dec. 24, 2020 2:34 PM ETAflac Incorporated (AFL)30 Comments

Summary

  • Aflac is one of the leading insurance companies in the business, with operations both domestically and internationally.
  • I wrote about the company's operations back in June, declaring it a Corona discount. Returns have been decent - but may go higher still.
  • At current valuations and despite a partial reversal, Aflac is still undervalued around 11%.
  • This makes the company a "BUY".

My returns on Aflac (NYSE:AFL) since the time of investment have been decent. Not spectacular like in some cases, but decent. This company usually doesn't move in very volatile patterns, with the COVID-19 crash being an obvious exception. Still, thus far, all of my COVID-19 discount calls have been rewarding - and this one is no real exception.

(Source: Seeking Alpha - Aflac - A Corona Discount)

If you recall from my initial article, the company is a 60+ year insurance giant in the field of cancer, accident, disability, illness, dental, vision and life insurance, among other things. The company's primary operating geographies are US and Japan.

Let's see how operations have been going and what we can expect from Aflac going forward.

Aflac - How has the company been doing?

Aflac has been doing well during the pandemic. It may not show from the company's slow rise back to normal valuations, but its approach doesn't materially differ from other companies affected, even in the same field.

Aflac's employees have been allowed to work from home, the company has enhanced benefits not only for employees, but policyholders as well, and has granted zero-interest loans for agents and agencies in the US and Japan. Aflac operations have gone to virtual and digital sales, and the company has seen an uptick in the demand for company sales.

On the operating side of things, things have been going well enough.

  • Revenues were up to $5.7B, from $5.5B YoY with net earnings of $2.5B.
  • EPS was $3.44 on a diluted share basis, up several hundred percent from a YoY $1.04 EPS, but there was a significant, $1.4B one-time effect due to deferred tax benefits.
  • The company reported an adjusted earnings increase of 15.2%, again mostly due to taxation benefits.

On a segment-specific basis, the

This article was written by

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Mid-thirties DGI investor/senior analyst in private portfolio management for a select number of clients in Sweden. Invests in USA, Canada, Germany, Scandinavia, France, UK, BeNeLux. My aim is to only buy undervalued/fairly valued stocks and to be an authority on value investments as well as related topics.

I am a contributor for iREIT on Alpha as well as Dividend Kings here on Seeking Alpha and work as a Senior Research Analyst for Wide Moat Research LLC.

Disclosure: I am/we are long AFL. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Additional disclosure: While this article may sound like financial advice, please observe that the author is not a CFA or in any way licensed to give financial advice. It may be structured as such, but it is not financial advice. Investors are required and expected to do their own due diligence and research prior to any investment.

I own the European/Scandinavian tickers (not the ADRs) of all European/Scandinavian companies listed in my articles.

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