Voya Financial: A "Buy Low" Opportunity

08/03/2017 2:50 am EST


Crista Huff

Editor, Cabot Undervalued Stocks Advisor

Voya Financial (VOYA), and it is a good "buy low" opportunity. The firm offers products and services in the areas of retirement planning, investment management, annuities, individual life insurance and employee benefits, notes growth and income expert Crista Huff, editor of Cabot Undervalued Stocks Advisor.

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The company is the result of a 2013 spinoff that’s now aggressively growing its return on equity (ROE). I believe its transformation should result in significant Wall Street attention and praise in the coming years.

Voya Financial offers products and services in the areas of retirement planning, investment management, annuities, individual life insurance and employee benefits.

Voya employs approximately 6,700 people serving about 13.6 million customers through 225,000 points of distribution. The company finished 2016 with a total of $484 billion in assets under management (AUM) and advisement (AUA).

In recent years, Voya has been focused on improving its ROE, which rose from 8.3% in 2012 to 12.2% in 2015. Voya is currently aiming for an ROE range of 13.5% to 14.5% in 2018.

Voya achieved adjusted earnings per share (EPS) of $2.61 in 2016 (December year-end). Wall Street analysts are currently expecting Voya to earn $3.55 and $4.46 per share in 2017 and 2018 (December year-end). (The company will report second-quarter 2017 results on the morning of August 2.)

Those eye-popping earnings growth rates to their retail and institutional clients, which should certainly garner a lot of attention and buying activity in the coming months.

Even better, the corresponding price/earnings ratios are incredibly low at 10.6 and 8.4. As a matter of fact, Voya’s stock has the lowest 2018 P/E and the lowest price-to-book ratio of any of the top dozen of its life insurance peers.

In the two years subsequent to its spinoff from ING Group NV (ING), VOYA rose from about $19 to $48, then slowly declined to a 2016 trading range between 23 and 33.
More recently, VOYA shot up to $43 in the post-U.S. election bull market, then had a price correction, stabilizing in a range between $33 and $38. Now that VOYA appears ready to emerge from that trading range and head higher, I’m putting a Buy recommendation on the stock.

There’s room for short-term traders to make about 13% profit as VOYA retraces its February high at $43. Longer-term investors should keep VOYA at that point, because the stock is extremely attractive from both growth and value perspectives.

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