AFLAC Beats, Guides Higher and Raises Its Dividend for the 30th Year in a Row

AFLAC’s ($AFL) earnings are out and they were very good. The company is raising full-year guidance and implying an increase to next year as well. If that isn’t enough, AFLAC raised its dividend for the 30th year in a row.

Now let’s look at some numbers.

Revenues rose 14.4% to $6.8 billion. Operating earnings, which is what we want to watch for with insurance companies, rose to $831 million which is $1.77 per share. Wall Street had been expecting $1.66 per share, so this was an impressive beat. Interestingly, the yen/dollar rate had no impact on operating earnings. Three months ago, AFLAC told us to expect earnings to be between $1.64 and $1.69 per share, so Q3 was much better than expectations.

The quarter was helped by two items:

In the quarter, the company revised its estimate of the full-year effective tax rate, which increased operating earnings by $17.5 million, or $.04 per diluted share. In addition, the company recognized an income tax benefit of $29.5 million, or $.06 per diluted share, primarily resulting from the favorable outcome of a routine tax exam for the years 2008 and 2009. Together, the impact from these items benefited operating earnings by $47 million, or $.10 per diluted share.

For the first three quarters of this year, revenues were up 17.3% to $19.0 billion, and operating earnings were $2.4 billion or $5.12 per share.

AFLAC is also raising its quarterly dividend by two cents per share or 6.1%. The dividend will rise from 33 cents to 35 cents per share. This is the 30th year in a row the company has increased its dividend. Going by today’s close, AFL yields 2.82%.

AFLAC expects Q4 operating earnings (assuming no impact from currency) to range between $1.46 and $1.51 per share. That means the full-year number will range between $6.58 and $6.63 per share. The previous full-year guidance was for $6.45 to $6.52 per share.

The company also revised higher its full-year sales forecast for AFLAC Japan to a growth rate of 30% to 35%.

AFLAC expects operating earnings for 2013 to rise by 4% to 7% (on a currency neutral basis). Working off the higher base for 2012, that implies $6.84 to $7.09 for next year. Wall Street currently expects 2013 EPS of $6.88.

Posted by on October 23rd, 2012 at 5:21 pm


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