It has been about a month since the last earnings report for Voya Financial (VOYA). Shares have lost about 9.7% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Voya due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.

Voya Financial’s Q3 Earnings Miss Estimates, Rise Y/Y

Voya Financial, Inc.’s third-quarter 2021 net operating income of $1.36 per share missed the Zacks Consensus Estimate by 13.4%. The bottom line increased 14.3% year over year. The company’s results reflected lower net investment income and fee income, and lower expenses.

Behind the Headlines

Total revenues decreased 8.2% year over year to $1.8 billion.  Net investment income decreased 8.6% to $731 million in the quarter. Fee income decreased 3.9% year over year to $487 million. Premiums decreased 5.1% to $573 million.

Total benefits and expenses decreased 27.9% year over year to $1.6 billion due to lower interest credited and other benefits to contract owners and policyholders, net amortization of DAC/VOBA and interest expense. Assets under management and administration were $718 billion as of Sep 30, 2021.

Segmental Update

Wealth Solutions’ adjusted operating earnings of $319 million increased nearly 13-fold year over year. This upside was due to higher investment income, primarily driven by an increase in alternative investment and prepayment income, higher fee-based margin driven by higher average equity market levels and cumulative net flows, and favorable change in DAC/VOBA and other intangibles unlocking. This was offset by higher administrative expenses.

Investment Management posted adjusted operating earnings of $63 million, up 34% year over year. The upside was due to higher investment capital revenues, including higher private equity results in the third quarter of 2021, higher fee-based margin driven by higher private equity fees and market appreciation, partially offset by lower revenues due to the company's sale of its Individual Life and other legacy annuities businesses. The year over year increase was offset by higher administrative expenses, primarily due to higher variable expenses associated with increased revenues. It had $753 million of institutional net outflows in the third quarter.

Health Solutions’ adjusted operating earnings were $71 million, up 26.9% year over year. The upside was due to $19 million of improved underwriting results. Business growth and lower loss ratios in Stop Loss and Voluntary were partially offset by a higher Group Life loss ratio, $13 million of higher investment income, primarily due to an increase in alternative investment income as well as $13 million of higher administrative expenses, largely due to the growth of the business.

Corporate incurred adjusted operating losses of $65 million, narrower than the year-ago quarterly loss of $88 million. This reflects revenue from the company's transition service agreements and the continued removal of stranded costs associated with the Individual Life transaction as well as lower intangibles amortization. These were partially offset by higher incentive compensation due to strong business results and higher alternative investment income.

Financial Update

As of Sep 30, 2021, cash and cash equivalents were $1.7 billion, up 59.4% year over year. As of Sep 30, 2021, total investments were $46.4 billion, down 17.2% year over year.

At the third-quarter end, long-term debt was $2.9 billion, down 2.4% from 2020 end. Financial leverage ratio deteriorated 130 basis points to 29.5% from 2020 end.

As of Sep 30, 2021, book value per share (excluding AOCI) was $48.59, up 36.4% year over year. Voya Financial exited the third quarter with $1.5 billion in excess capital.

Dividend Update

Voya Financial increased its dividend by more than 20% beginning with the fourth quarter of 2021. As of Sep 30, 2021, Voya repurchased shares of $833 million. Voya aims to repurchase at least $1.1 billion of shares in 2021 and authorized the repurchase of an additional share $500 million.

Including the new $500 million repurchase authorization, Voya has approximately $831 million remaining under its share repurchase authorizations.

How Have Estimates Been Moving Since Then?

It turns out, estimates review have trended downward during the past month. The consensus estimate has shifted -6.69% due to these changes.

VGM Scores

At this time, Voya has a poor Growth Score of F, however its Momentum Score is doing a lot better with an A. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Voya has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

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