Is Brighthouse Financial (BHF) Pricing In The Aquarian Takeover Offer Yet
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If you are wondering whether Brighthouse Financial’s current share price reflects its true worth, you are not alone. This article is here to break that question down in plain terms.
The stock closed at US$63.91, with returns of 0.1% over 7 days, a 0.2% decline over 30 days, a 1.0% decline year to date, 1.8% over 1 year, 12.7% over 3 years and 57.9% over 5 years, which gives you a mixed picture to weigh up.
Recent coverage around life insurers and annuity providers has focused on topics such as capital strength, product mix and how companies are managing long dated guarantees. All of these factors feed into how investors think about risk and value. For Brighthouse Financial, these themes provide helpful context when you look at its share price moves and what the market might be pricing in.
On our checklist of six valuation tests, Brighthouse Financial scores a 5 out of 6 valuation score. Next we will walk through the standard valuation methods you are used to seeing and then finish with a more complete way to think about what the stock could be worth.
The Excess Returns model looks at how much profit a company generates over and above the return that equity investors are assumed to require. Instead of focusing on short term earnings swings, it uses book value and a steady earnings power to estimate what the business could be worth per share.
For Brighthouse Financial, the model uses a Book Value of US$111.33 per share and a Stable EPS of US$15.62 per share, based on weighted future Return on Equity estimates from 4 analysts. The Average Return on Equity is 13.69%, compared with a Cost of Equity of US$11.08 per share. That gap produces an Excess Return of US$4.54 per share, which is the profit attributed to value created beyond the required return.
The Stable Book Value input is US$114.08 per share, sourced from weighted future Book Value estimates from 4 analysts. Putting these pieces together, the Excess Returns model arrives at an estimated intrinsic value of about US$186.16 per share. Against the recent share price of US$63.91, this implies the stock is 65.7% undervalued.
For a profitable company like Brighthouse Financial, the P/E ratio is a useful shorthand for how much investors are currently paying for each dollar of earnings. It helps you relate the share price directly to the underlying profitability.
What counts as a “normal” P/E depends on what investors expect from a business and how much risk they see. Higher expected growth or lower perceived risk can support a higher P/E, while more uncertainty or lower expected growth usually lines up with a lower P/E.
Brighthouse Financial trades on a P/E of 4.23x. That sits well below the Insurance industry average of 12.34x and the peer group average of 12.09x. Simply Wall St’s Fair Ratio for Brighthouse Financial is 16.10x. This Fair Ratio is a proprietary estimate of what the P/E might be given the company’s earnings profile, industry, profit margins, market cap and specific risk factors, rather than just a simple comparison with peers.
Because the Fair Ratio of 16.10x is meaningfully higher than the current P/E of 4.23x, this multiple-based view points to the shares trading below what this framework would suggest.
Earlier we mentioned that there is an even better way to understand valuation, so let us introduce you to Narratives. These are simply your own story about Brighthouse Financial, linking what you think will happen to its revenue, earnings and margins to a forecast and a Fair Value. You can compare this with the current price on Simply Wall St’s Community page, where Narratives are updated automatically as new news or earnings arrive. They can differ widely, for example between someone who builds a more optimistic case closer to the US$72 price target and someone who leans toward the more cautious US$42 view. This gives you a clear, numbers backed way to decide whether the current share price looks high, low or roughly in line with the story you believe.
For Brighthouse Financial, here are previews of two leading Brighthouse Financial Narratives that may help you compare different perspectives:
🐂 Brighthouse Financial Bull Case
Fair value: US$65.50 per share
Implied discount to this fair value: about 2.4% relative to the last close of US$63.91
Assumed revenue growth: 7.43% a year
Analysts link strong demand for annuities and life products, plus workplace distribution like BlackRock LifePath Paycheck, to a broader customer base and support for premium growth.
Cost control, capital efficiency work and ongoing tech investment are framed as tools to steady earnings and support margins while the business scales.
This view uses the Aquarian US$70 per share takeout as a reference point and assumes the current share price already reflects most of that deal value.
🐻 Brighthouse Financial Bear Case
Fair value: US$55.00 per share
Implied premium to this fair value: about 16.2% relative to the last close of US$63.91
Assumed revenue growth: 1.76% a year
Bearish analysts focus on slower demographic trends, lack of proprietary distribution and heavier reliance on spread based annuities as constraints on long term growth.
They highlight earnings and capital sensitivity to markets, regulation and rating agency views, which could keep pressure on margins and book value.
In this view, most of the upside is tied to the Aquarian deal closing at US$70, with limited room for extra return if fundamentals do not improve faster than expected.
If you want to see how other investors are framing the balance between these two views and how they are thinking about the next stage of the story, you can compare the full range of community views through Curious how numbers become stories that shape markets? Explore Community Narratives and consider which narrative aligns more closely with your own expectations for Brighthouse Financial.
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
