Supplemental health and life insurer Aflac (NYSE:AFL) will report Q4 2006 financial results on today after the markets close, revealing whether it's all it's quacked up to be.

What analysts say:

  • Buy, sell, or waffle? Twenty-two analysts take aim at Aflac, a recommendation of Motley Fool Stock Advisor, with 10 saying the insurer is a buy, 10 saying hold, and two recommending a sell.
  • Revenues. Quarterly revenues are expected to top $3.685 billion, up 3.3% from last year.
  • Earnings. Profits for the quarter, however, are forecast to rise by more than 15% to $0.67 per share.

What management says:
With nearly three-quarters of its revenues derived from operations in Japan, a lot of Aflac's results are dependent upon currency exchange rates, which so far this year have been having an impact. The yen hasn't been as strong, and -- on paper, anyway -- things can look worse than they are, since the company doesn't actually convert yen into dollars. According to Chairman and CEO Daniel Amos, "Assuming the yen averages 115 to 120 to the dollar for the remainder of the year, we would expect to report operating earnings of $0.65 to $0.66 per diluted share in the fourth quarter." Exchange rates show that the yen currently equals 121 to the dollar.

What management does:
A weak sales picture in Japan, although expected by management, still pushed down results last quarter. That drop was exacerbated by a yen that was as much as 4% weaker than the year before. On a year-to-date basis, the company's sales and profits have been strong, and with the yen seemingly topping Aflac's hoped-for range, margins should revive once again.



















All data courtesy of Capital IQ, a division of Standard & Poor's. Data reflects trailing-12-month performance for the quarters ended in the named months.

One Fool says:
Considering the company's nearly 70% market share in Japan, investors should expect most of Aflac's future growth to come from its domestic operations. Sales in the U.S. have been growing at a healthy clip, with premiums rising nearly 10%, investment income up 12%, and total revenues up 10% to $1 billion in the third quarter. Domestic profits have also been soaring, and were up 21%. The stock, meanwhile, has gone nowhere. It sits at essentially the same spot it did one year ago, primarily because of what is viewed as weakness in the Japanese market. It had a price-to-earnings ratio of around 16 this time last year -- where it is today -- but now has a stronger stream of U.S. revenues and profits and a likely stronger Japanese market. I see that as an anomaly investors can exploit.


  • Unum Provident (NYSE:UNM)
  • Conseco (NYSE:CNO)
  • Assurant (NYSE:AIZ)
  • Delphi Financial (NYSE:DFG)
  • Metlife (NYSE:MET)

Related Foolishness:

Aflac has earned a four-star rating from Motley Fool CAPS, the new investor-intelligence community. You can add your voice to the new stock-rating service by joining today. It's free! Aflac is also a recommendation of Motley Fool Stock Advisor, which you can try free for 30 days.

Fool contributor Rich Duprey has several insurance policies with Aflac, but does not own any of the stocks mentioned in this article. You can see his holdings here. The Motley Fool has a disclosure policy.