Voya Financial Trading at Discount to Industry at 1.05X: Time to Hold?

Voya Financial, Inc. VOYA shares are trading at a discount compared to the Zacks Life Insurance industry. Its forward price-to-book value of 1.05X is lower than the industry average of 1.96X, the Finance sector’s 3.99X and the Zacks S&P 500 Composite’s 8.85X. The life insurer has a Value Score of A.Image Source: Zacks Investment ResearchThe insurer has a market capitalization of $6.56 billion. The average volume of shares traded in the last three months was 0.8 million.The stock remains attractively valued compared with Primerica, Inc. PRI, Manulife Financial Corp. MFC and Sun Life Financial Inc. SLF. 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. It has a solid track record of beating earnings estimates in each of the last four quarters, the average being 6.77%.Voya Financial shares have lost 4.4% in the past six months against the industry’s growth of 13.6%. The Zacks S&P 500 index and the Finance sector have returned 10.3% and 13.4%, respectively, in the said time frame.Six Months Price PerformanceImage Source: Zacks Investment ResearchFactors Acting in Favor of VOYAVOYA’s earnings are driven by its solid segmental performances across Wealth Solutions, Investment Management and Health Solutions. These businesses reflect 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 Sept. 30, 2024, the estimated combined RBC ratio, with adjustments for certain intercompany transactions, was 395%. Voya Financial exited the third quarter with cash and cash equivalents of $1.4 billion, which surged 75.7% year over year. 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.VOYA’s Wealth DistributionOperational excellence has been helping the company deploy capital to enhance shareholders’ value. As of Sept. 30, 2024, the remaining repurchase capacity under the board's authorization was $382 million. Beginning in the third quarter of 2024, VOYA increased the quarterly dividend by 12.5%. Voya Financial remains on track to return $800 million in excess capital to shareholders in 2024 and is well-positioned to significantly improve excess capital generation in 2025.HeadwindsHowever, the life insurer has been experiencing increased expenses due to higher policyholder benefits, interest credited to contract owner account balances, operating costs and interest expenses. If the company does not strive to generate revenue growth greater than the magnitude of the increase in expenses, the margin will continue to erode.End NotesFavorable retention, positive impacts of the Benefitfocus buyout, higher investment income, solid underlying business results and effective capital deployment should continue favoring VOYA over the long term. Voya Financial should continue to benefit from other positives coupled with the affordability of shares. It is, therefore, wise to hold on to this Zacks Rank #3 (Hold) stock. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.Free: 5 Stocks to Buy As Infrastructure Spending SoarsTrillions of dollars in Federal funds have been earmarked to repair and upgrade America’s infrastructure. In addition to roads and bridges, this flood of cash will pour into AI data centers, renewable energy sources and more.In, you’ll discover 5 surprising stocks positioned to profit the most from the spending spree that’s just getting started in this space.Download How to Profit from the Trillion-Dollar Infrastructure Boom absolutely free today.Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Manulife Financial Corp (MFC): Free Stock Analysis Report Primerica, Inc. (PRI): Free Stock Analysis Report Sun Life Financial Inc. (SLF): Free Stock Analysis Report Voya Financial, Inc. 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