Voya Financial, Inc. VOYA closed at $76.78 on Wednesday, near its 52-week high of $77.53. This proximity underscores investor confidence. It has the ingredients for further price appreciation. The stock is trading above the 50-day and 200-day simple moving average (SMA) of $70.38 and $71.21, respectively, indicating solid upward momentum. SMA is a widely used technical analysis tool to predict future price trends by analyzing historical price data.

Earnings of Voya Financial grew 16.2% in the last five years, better than the industry average of 4.6%. VOYA has a solid surprise history. The life insurer has a solid track record of beating earnings estimates in three of the last four quarters while missing in one, the average being 5.68%.

Shares of this life insurer have gained 5.2% year to date compared with the industry’s growth of 18.8% and the Zacks S&P 500 composite’s return of 18%.

VOYA YTD Performance

Image Source: Zacks Investment Research

Positive Analyst Sentiment Instills Confidence in VOYA

One of the six analysts covering the stock has raised estimates for 2024 and two of the seven analysts have raised the same for 2025 over the past 30 days. The Zacks Consensus Estimate for 2024 and 2025 increased 0.4% and 2.7%, respectively.

VOYA’s Encouraging Growth Projection

The Zacks Consensus Estimate for Voya Financial’s 2024 earnings per share indicates a year-over-year increase of 3.8%. The consensus estimate for revenues is pegged at $1.26 billion, implying a year-over-year improvement of 11.8%. The consensus estimate for 2025 earnings per share and revenues indicates an increase of 16.3% and 6.2%, respectively, from the corresponding 2024 estimates.

VOYA’s Favorable Return on Capital

Return on equity in the trailing 12 months was 16.1%, better than the industry average of 15.5%. This highlights the company’s efficiency in utilizing shareholders’ funds. 

Also, the return on invested capital (ROIC) has been increasing over the last few quarters as the company raised its capital investment over the same time frame, reflecting Voya Financial’s efficiency in utilizing funds to generate income. ROIC in the trailing 12 months was 0.9%, better than the industry average of 0.6%.

Factors Acting in Favor of VOYA

VOYA’s earnings are driven by its solid segmental performances across Wealth Solutions, Investment Management and Health Solutions. These businesses are higher-growth, capital-light and higher-return units, boasting the company’s solid presence in the market.

The Wealth Solutions segment is steadily witnessing significant growth on the back of continued strength in underlying business results, higher surplus income, lower credited interest, improved investment income, weaker fee-based margin, a favorable change in deferred acquisition costs and value of business acquired and lower administrative expenses. In Wealth Solutions, full-service recurring deposits should continue to gain from growth in the corporate markets. 

The Investment Management segment should benefit from higher investment capital returns due to its overall market performance and improved fee revenues, driven by higher average equity markets and positive net flows.

VOYA is constantly taking strategic steps to ramp up growth in its Investment Management segment. Voya Financial and Allianz Global Investors inked a long-term strategic partnership that added scale and diversification to Voya Investment Management. Voya Investment Management’s adjusted operating margin is expected to increase 30-32% for 2024.

The Health Solutions segment of the insurer is likely to benefit from growth across all product lines, favorable retention and the positive impacts of the Benefitfocus acquisition.

The company’s capital levels remain strong. As of June 30, 2024, the estimated combined RBC ratio, with adjustments for certain intercompany transactions, was 407%. Voya Financial exited the second quarter with cash and cash equivalents of $1 billion, which jumped 13.8% from the end of 2023. This financial flexibility provides strength to the company. VOYA continues to demonstrate strong excess capital generation and high free cash flow conversion in line with the targets for 2024.