Why Jackson Financial Stock took off on Wednesday

What happened

Financial Jackson (NYSE: JXN) saw its price soar on Wednesday, up 15.9% to over $33 per share around 10:15 a.m. By 1:15 p.m. ET Wednesday, the stock had risen 14.6% to 32.77 $.

All major indexes were up sharply on Wednesday morning, but the catalyst for Jackson was its second-quarter results, released after market close on Tuesday, which beat analysts’ estimates.

So what

Jackson Financial is the second largest annuity provider in the United States. He comes from a London-based insurance and financial services company. Prudential Plc last fall.

Jackson Financial reported adjusted operating income of $252 million, or $2.52 per share, down from $6.74 per share in the second quarter of 2021. The decline was primarily due to higher levels high amortization of deferred acquisition costs (DAC) and lower commission income caused by lower assets under management, linked to market depreciation. The company uses adjusted earnings because it excludes, among other things, changes in the fair value of derivative instruments related to market volatility.

Total annuity account value was down 17% year over year, with annuity sales down 15%. However, the company saw its registered index-linked annuity (RILA) product sales climb to $490 million from $199 million in the first quarter. These products were just introduced in the fourth quarter of last year.

The market reacted favorably to the earnings news, as Jackson smashed analyst estimates of $1.76 to $1.91 adjusted EPS.

Now what

Investors may also have liked the fact that Jackson Financial declared a $0.55 dividend in the third quarter, the same as the previous quarter, at a yield of 7.7%. As President and CEO Laura Prieskorn said in the earnings report, the company has reduced debt and improved liquidity, paving the way for returning capital to shareholders.

“Our healthy balance sheet allowed us to return $116 million to shareholders during the quarter and supports our continued commitment to return capital to shareholders through dividends and opportunistic share buybacks, consistent with our return objective. capital of $425 to $525 million for 2022,” she said. said.

With interest rates continuing to rise, annuity sales should be robust for the remainder of 2022, which should help Jackson Financial. Additionally, the stock is extremely cheap, with a price-to-earnings ratio of 1 and a price-to-book ratio of 0.26.

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Dave Kovaleski has no position in the stocks mentioned. The Motley Fool recommends Prudential. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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