I don’t usually keep track of earnings calls beyond the quarterly dividend day call on Intel INTC 0.00%↑ earnings day, but this time Aflacs AFL 0.00%↑ seemed interesting, and so I thought I’d take a look at them, and explain my thought process.
Quack!
The Earnings
The company’s revenues were actually down compared to 2022, which is unfortunately but no wholly unexpected given the fact that the Yen/USD was almost 6% weaker than in 2022.
The company does most of its business in Japan, so Japanese Yen performance, and the cash they spend on hedging their exposure to it, has a meaningful impact on returns.
Indeed, the company’s net investment gains were essentially driven by the gains of derivative and foreign currency activities.
At the same time though, the US segment continues to be the growth engine I originally expected:
And of course, the most important thing is shareholder returns, or better yet, the capital returned to shareholders by Aflac.
The company declared a new $0.42 dividend, and spent another $700 million buying back stock.
Both share buybacks and dividends are key components for my returns from the company, and while its unfortunate that the share price has shot up sincce I first bought the company, I still feel that Aflac is fairly valued, and I’m ok with spending this cash on buybacks.
In terms of dividends, it’s worth remembering that I first bought Aflac in January 2021, after a long time considering its value, and at that time the last dividend paid was $0.28 per share, and no dividend had been announced yet.
Since I first purchased the company my dividend income from it has increased substantially, and now the dividend is 150% of what I originally expected it was going to be!
Overall I’m happy at the performance of the company, though unhappy about the rising share price.
I like my companies cheap, so I can buy more!