Rating Change #4
AEGON/Transamerica (AEG) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its revenue growth, good cash flow from operations and largely solid financial position with reasonable debt levels by most measures. We feel these strengths outweigh the fact that the company has had sub par growth in net income.
Highlights from the ratings report include:
- The revenue growth came in higher than the industry average of 7.0%. Since the same quarter one year prior, revenues rose by 17.6%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- Net operating cash flow has significantly increased by 120.84% to $525.59 million when compared to the same quarter last year. In addition, AEGON NV has also vastly surpassed the industry average cash flow growth rate of -13.96%.
- AEGON NV has exprienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. The company has suffered a declining pattern of earnings per share over the past year. However, we anticipate this trend reversing over the coming year. During the past fiscal year, AEGON NV swung to a loss, reporting -$0.08 versus $0.98 in the prior year. This year, the market expects an improvement in earnings ($0.43 versus -$0.08).
- Despite currently having a low debt-to-equity ratio of 0.40, it is higher than that of the industry average, inferring that management of debt levels may need to be evaluated further.
- Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 31.08%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 57.14% compared to the year-earlier quarter. Looking ahead, the stock's sharp decline over the past year may have been what was needed in order to bring its value into alignment with its fundamentals and others in its industry.
AEGON N.V. provides life insurance, pensions, and asset management products and services worldwide. The company has a P/E ratio of 2.6, below the average insurance industry P/E ratio of 5.4 and below the S&P 500 P/E ratio of 17.7. AEGON/Transamerica has a market cap of $8.56 billion and is part of the financial sector and insurance industry. Shares are up 31.8% year to date as of the close of trading on Wednesday.You can view the full AEGON/Transamerica Ratings Report or get investment ideas from our investment research center.
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