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We are back with two more earnings reports. Last time, I went through Helix Energy’s (HLX) 1Q2021 results. I thought the report was fine - they posted a beat and there were no real surprises - but the market hated it initially. HLX was down over double digits at one point the next day. I thought this was an overreaction, so I bought more. HLX has proven me right so far, posting a 5.7% gain today, but we will see if that momentum can continue in the coming days. For now, we will focus on Aflac (AFL) and CNO Financial Group (CNO), which reported after the market closed. Remember, this is not financial advice.
AFL
The last time I talked about AFL, I said I was just going to hold it forever because it is a great company. They really proved it this quarter, because this report was just an absolute blowout. I loved just about everything here. The experts guessed AFL was going to post earnings of $1.24 per share on revenue of $5.54 billion; instead, we got earnings of $1.53 per share on revenue of $5.87 billion. The shareholder equity fell, but that was mostly a function of buybacks (which, I will stress again, function the same as dividends), from what I can tell. The book value per share actually increased, as shown in Figure 1.
The price-to-book ratio plot in Figure 2 tells me that there is still plenty of room for AFL to rise.
There were no surprises in the rest of the report. I am happy to keep holding AFL. My previous IV for it was around $53 per share. Now, I think it is around $57. AFL delivered again this quarter, and I see no reason for this to stop any time soon.
CNO
When I last wrote about CNO, I was very bullish. I actually was so confident that I bought when the stock was near its all-time high. I think this earnings report makes that move look pretty savvy, especially since the stock’s technicals are pointing to a major breakout, as you can see in Figure 3.
CNO beat expectations, reporting earnings of $0.55 per share on revenues of $1.006 billion. Shareholder equity took a pretty big hit (see Figure 4), but that’s what happens when a company buys back $100 million in shares.
The book value per share for CNO correspondingly decreased, but not by a huge amount. No worries there. The dividend was still solid as well. All-in-all, I think the IV is still $40, and I am still confident in the trade.
That’s all for this article! I hope you enjoyed. Lots of reports will be coming out next week; if you don’t want to miss any of my analysis, make sure you subscribe or redeem the free trial! See you next time!