The Yen Continues to Weigh on AFLAC

AFLAC ($AFL) is back below $50 and the culprit isn’t hard to spot — the weaker yen. Since October, the yen has gotten hammered by the U.S. dollar.

In March, the yen staged a quick relief rally, but that recently collapsed. It now takes 99 yen to buy one U.S. dollar. In October, it took just 78. I think we’re going to break 100 soon.

The reason for the big change is that Japan’s new government is aggressively trying to weaken its currency in order to help their economy. The Nikkei Index has responded by shooting up from 9,000 to as high as 13,200. That’s a huge move for such a short time period.

AFLAC said in their 10-K that if the yen averages 100 for this year, that will shave 87 cents off their operating earnings-per-share. At 100 yen to the dollar, AFLAC’s earnings range would be $5.99 to $6.19 per share for 2013.

Exchange Rate EPS Range Growth Rate Yen Impact
79.81 $6.86 to $7.06 3.9% to 7.0% $0.00
85 $6.60 to $6.80 0% to 3% -$0.26
90 $6.37 to $6.57 (3.5%) to (0.5%) -$0.49
95 $6.17 to $6.37 (6.5%) to (3.5%) -$0.69
100 $5.99 to $6.19 (9.2%) to (6.2%) -$0.87

Posted by on April 8th, 2013 at 1:58 pm


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