Aflac Stock Gains 16.1% in 6 Months: What Should Investors Do Now?

Core Viewpoint - Aflac Incorporated (AFL) has shown strong stock performance, gaining 16.1% over the past six months, outperforming both the Finance sector and the S&P 500, which gained 12.2% and 9.2% respectively, raising questions about the timing for investors to buy, sell, or hold the stock [1]. Key Drivers - Aflac is actively introducing new products and upgrading existing ones to meet changing customer needs, including a partnership with SKYGEN to enhance dental and vision benefits management, and the launch of Tsumitasu targeting young and middle-aged customers in Japan [3]. - The company is shifting towards digital sales channels, which is expected to support strong profit margins, with the U.S. expense ratio improving by 260 basis points year over year in Q3 [4]. Revenue Growth - Aflac's revenue growth is driven by strong sales in both the U.S. and Japan segments, with sales increasing by 5.5% in the U.S. and 12.3% in Japan year over year in Q3 2024 [11]. - The expansion of product offerings, such as Tsumitasu and upcoming cancer insurance products, is expected to further boost sales and premiums, which are crucial for revenue growth [11]. Financial Position - Aflac has demonstrated a solid financial position, with cash and cash equivalents increasing by 30.2% as of September 30, 2024, and generating $2.4 billion in operating cash flows in the first nine months of 2024 [17]. - The company announced a 16% increase in its first-quarter 2025 dividend to 58 cents per share, reflecting its strong cash flow generation and commitment to shareholder returns [17]. Earnings Estimates - The Zacks Consensus Estimate for Aflac's 2024 earnings is $7.27 per share, indicating a growth of 16.7% from the previous year, with upward revisions in the past 60 days [18]. Valuation Perspective - Aflac's shares are currently trading at a forward price/earnings ratio of 14.67X, which is higher than the industry's average of 12.88X and the median value of 11.41X, suggesting that the stock may be relatively expensive compared to its peers [19].