Aflac Inc. (AFL) offers supplemental health insurance and life insurance in the two largest insurance markets in the world, the U.S. and Japan. In addition to its cancer policies, the company has broadened its product offerings to include accidents, disability, and long-term-care insurance.
The company’s U.S segment is set up for growth due to its buyout of Argus Dental and Vision as well as Zurich North America's U.S. Corporate Life and Pensions business. AFL should also benefit from a strong product pipeline this year and cost-cutting initiatives.
AFL’s debt-to-equity ratio of 0.2 indicates it is on solid financial footing. The company has grown earnings an average of 14.4% per year over the past five years, but earnings are down 7.1% over the past year. However, analysts expect earnings to rise 18.7% year over year in the current quarter.
The stock looks undervalued right now with a forward P/E of 10.68. AFL was showing bullish momentum from November of last year into June of this year. However, performance has been mixed since, as shown in the chart below.
Take a look at the 1-year chart of AFL below with added notations:
AFL was trending higher since going into the summer but eventually started to struggle to get past the $57.50 level (blue), which is also the 52-week high. That mark has been tested as resistance multiple times over the past several months.
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Now that AFL has turned higher, the stock could be set to hit new highs in the coming weeks. The ideal long position on the stock would be on a breakout above the $57.50 level, with a protective stop placed below the entry point.
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AFL shares fell $56.33 (-100.00%) in premarket trading Friday. Year-to-date, AFL has gained 29.06%, versus a 25.61% rise in the benchmark S&P 500 index during the same period.
About the Author: Christian Tharp
I am an expert stock market coach having helped over 4000 beginner and advanced traders & investors from around the world take control of their financial futures. I also write stock market related articles for the Adam Mesh Trading Group and Yolo Publishing.
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