Poor Earnings Report from AFLAC

After yesterday’s closing AFLAC (AFL) reported soggy results for Q4. The duck stock reported operating earnings of $1.46 per share. That was 17 cents below Wall Street’s estimate of $1.63 per share.

I have to discuss the important issue of the exchange rate because so much of AFLAC’s business is done in Japan. For the fourth quarter, the yen/dollar exchange rate averaged 109.1. That’s 11.4% stronger (meaning lower) than Q4 of 2015. The stronger exchange rate added eight cents per share to AFLAC’s Q4 bottom line. So after we adjust for currency, their EPS fell by 6.4%.

For the entire year, AFLAC had operating income of $6.79 per share. That’s up from $6.16 in 2015. However, the exchange rate added 34 cents per share. Adjusting for that, last year’s earnings were up by 4.7%.

CEO Dan Amos said:

“As we look to 2017, our guidance remains unchanged since our December outlook call. Our objective is to produce stable operating earnings per diluted share of $6.40 to $6.65, assuming the average exchange rate in 2016 of 108.70 yen to the dollar. As always, we are working very hard to achieve our earnings-per-share objective while also ensuring we deliver on our promise to policyholders.”

Wall Street is not pleased with the earnings report. Shares of AFLAC are currently down about 4%.

Posted by on February 1st, 2017 at 1:40 pm


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