Can Aflac Beat Q3 Earnings Estimates Despite Soft Japan Operations?

Core Viewpoint - Aflac Incorporated (AFL) is expected to report a decline in earnings and revenues for the third quarter of 2024, with earnings per share estimated at $1.69, reflecting an 8.2% decrease from the previous year [1][2]. Earnings Estimates - The Zacks Consensus Estimate for earnings per share is $1.69, indicating an 8.2% decline from the prior-year quarter [1]. - The revenue estimate is pegged at $4.6 billion, which represents a 7% decrease from the year-ago quarter [2]. - Aflac's earnings surprise history shows that the company has beaten estimates in three of the last four quarters, with an average surprise of 8.24% [2]. Earnings Prediction Model - Aflac has an Earnings ESP of +0.66%, as the Most Accurate Estimate of $1.70 per share is higher than the Zacks Consensus Estimate [4]. - The company currently holds a Zacks Rank of 3 (Hold) [4]. Revenue Growth Factors - Revenue growth is anticipated to be supported by strong contributions from U.S. operations, driven by increased net earned premiums and higher-yielding fixed-income investments [5]. - The consensus estimate for net earned premiums in the U.S. segment is $1.5 billion, indicating a 3.3% increase from the prior-year quarter [6]. - Adjusted net investment income for the U.S. segment is estimated at $217.3 million, reflecting a 4% growth year-over-year [6]. Japan Segment Challenges - Aflac's Japan segment is expected to face challenges with a decline in net earned premiums, projected at $1.8 billion, indicating a 9.1% decrease from the prior-year quarter [7]. - Despite the challenges, solid persistency rates may provide some support to the segment's quarterly results [7]. Consolidated Financial Estimates - The consensus estimate for consolidated net earned premiums is $3.4 billion, indicating a 2.4% decrease from the prior-year quarter [8]. - Total net investment income is estimated at $952.6 million, reflecting a 5.1% decline year-over-year [8]. - Expense ratios in both segments are expected to improve due to prudent expense management efforts [8]. Stock Performance - Aflac's shares have gained 33.8% year-to-date, outperforming the industry growth of 33.4%, the broader Zacks Finance sector's 17% rise, and the S&P 500 index's 21.9% increase [9].