Voya Financial trades at $80.95 per share and has stayed right on track with the overall market, gaining 13.5% over the last six months. At the same time, the S&P 500 has returned 10%.
Is there a buying opportunity in Voya Financial, or does it present a risk to your portfolio? Get the full stock story straight from our expert analysts, it’s free.
Why Is Voya Financial Not Exciting?
We're sitting this one out for now. Here are three reasons we avoid VOYA and a stock we'd rather own.
1. Long-Term Revenue Growth Disappoints
A company’s long-term performance is an indicator of its overall quality. Any business can have short-term success, but a top-tier one grows for years.
Regrettably, Voya Financial’s revenue grew at a mediocre 6.1% compounded annual growth rate over the last five years. This fell short of our benchmark for the financials sector.
2. Recent EPS Growth Below Our Standards
Although long-term earnings trends give us the big picture, we like to analyze EPS over a shorter period to see if we are missing a change in the business.
Voya Financial’s weak 4.9% annual EPS growth over the last two years aligns with its revenue trend. This tells us it maintained its per-share profitability as it expanded.
3. Growing TBVPS Reflects Strong Asset Base
We consider tangible book value per share (TBVPS) an important metric for financial firms. TBVPS represents the real, liquid net worth per share of a company, excluding intangible assets that have debatable value upon liquidation.
Although Voya Financial’s TBVPS declined at a 13.1% annual clip over the last five years. the good news is that its growth inflected positive over the past two years as TBVPS grew at an impressive 13.5% annual clip (from $25.12 to $32.36 per share).
Final Judgment
Voya Financial isn’t a terrible business, but it isn’t one of our picks. That said, the stock currently trades at 8.3× forward P/E (or $80.95 per share). While this valuation is optically cheap, the potential downside is big given its shaky fundamentals. We're pretty confident there are more exciting stocks to buy at the moment. We’d suggest looking at an all-weather company that owns household favorite Taco Bell.
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