Aflac, commonly known for its duck spokesperson and funny advertisements, is an American and Japanese insurance company based out of Columbus, Ga. Aflac’s primary function is that of a general business holding and management company which oversees the operations of its subsidiaries by providing management services and making capital available.
The company is the No. 1 provider of guaranteed-renewable insurance in the U.S., and in Japan the company is the No. 1 life insurance company in terms of individual policies in force.
This past week Aflac announced its third quarter results and along with those, it also announced a 5.7% increase in its quarterly dividend. This increase represents the 31st consecutive year in which the company has boosted its quarterly distribution.
The new quarterly dividend yield is $0.37 per share, up from $0.35 per share, and representing a dividend yield of 2.3%. This puts an additional approximate $37 million in the pockets of Aflac shareholders. The company has paid consistent quarterly dividends every year since 1973.
Aflac’s historical dividend growth rate:
· 10-year: 19.10%
· 5-year: 7.90%
· 3-year: 6.20%
Along with this dividend increase, the company also announced its plans to buy back $800 million worth of its shares in the remainder of 2013. This amount is up from the company’s July estimate of buying back $600 million. And even more so, the insurance company announced its estimates to buy back anywhere from $800 million to $1 billion worth of shares in the next year.
The announcement of this sent the company’s share price up to a record high of $67 per share.
Aflac’s historical pricing:
Last Tuesday the company also released its third quarter financials which reported:
· Revenues fell 14% to $5.9 billion, compared to $6.8 billion last year.
· Net earnings were $702 million, or $1.50 per diluted share, compared with $1 billion and $2.16 per share a year ago.
· Operating earnings were $687 million, compared to $831 million last year.
· First nine months net earnings of 2.5 billion, or $5.31 per diluted share, compared with $2.3 billion in the first nine months of 2012.
As the company operates business in both America and Japan, they attribute some of the struggles of the past quarter to the weakened yen/dollar exchange rate.
Aflac’s historical revenue and net income:
Also over the past quarter Aflac was named to the 2013 Dow Jones Sustainability Index (DJSI) North America list. This is the third year in a row that Aflac has been awarded a position on this list.
The top guru shareholders of Aflac as of the close of the second quarter:
1. Bill Nygren: 3,210,000 shares, representing 0.69% of the company’s shares outstanding and 2.1% of his total assets managed.
2. Pioneer Investments: 1,646,991 shares, representing 0.35% of the company’s shares outstanding and 0.4% of the company’s total assets managed.
3. John Rogers: 1,400,110 shares, representing 0.3% of the company’s shares outstanding and 1.3% of his total portfolio holdings.
The Peter Lynch Chart suggests that the company is currently undervalued:
Aflac has a market cap of $30.15 billion. Its shares are currently trading at around $64.82 with a P/E ratio of 10.00, a P/S ratio of 1.20 and a P/B ratio of 2.10. The company had an annual average earnings growth of 21.40% over the past five years.