Aflac (AFL) Scales 52-Week High: What's Driving The Stock?

On Aug 30, 2016, shares of AFLAC Inc. (NYSE:AFL) hit a 52-week high of $74.37 driven by continued favorable performance and better-than-expected second-quarter 2016 earnings. The insurer delivered an average positive surprise of 4.85% in last four quarters. About 1.4 million shares exchanged hands in the last trading session and the stock finally closed at $74.28, up 0.8%.

The stock price appreciation has been supported by company’s consistently impressive performance over the past several quarters in spite of low interest rates posing significant challenges for its Japan operations.

Investors are impressed by the company’s efforts to tackle the negative interest rate in Japan by limiting the sale of its first-sector products and emphasizing on the sale of third-sector products. Also, ongoing strategic sales growth initiatives within Aflac’s U.S. operations have boosted investor sentiments.

This Zacks Rank #3 (Hold) insurer was recently affirmed investment grade ratings by A.M.Best, which acknowledge its continued strong risk-adjusted capitalization and excellent financial flexibility. The company’s consistently strong operating earnings and well-managed investment portfolio are also reflected by the ratings.

Based on the strong performance, the company expects operating earnings per share between $6.17 and $6.41 for the full year which implies a growth rate of 0.2–4.1% over 2015 earnings, has been well received by the investors.

The company’s effective capital management is another positive. Aflac’s balance sheet strength is backed by its robust cash position and shareholders’ equity. At the end of the last reported quarter, these metrics displayed year-over-year increase of 22% and 32%, respectively.

Stocks that Warrant a Look

Some better-ranked stocks in the insurance space include Health Insurance Innovations, Inc. (NASDAQ:HIIQ) , Primerica, Inc. (NYSE:PRI) and Sun Life Financial (TO:SLF) . While Health Insurance Innovations sports a Zacks Rank #1 (Strong Buy), the other two stocks hold a Zacks Rank #2 (Buy).

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