In recent years, the rise of artificial intelligence (AI) has dramatically shifted investor sentiment, causing a heavy tilt toward the tech industry. As AI innovations drive productivity and reshape industries, investors have flocked to technology stocks, hoping to capitalize on the transformative potential of this groundbreaking technology. This trend has resulted in soaring valuations and a concentrated market, where the spotlight often shines solely on tech giants.
As a result, veteran value investor Bill Nygren, portfolio manager at Oakmark Funds for 40 years, cautions that the S&P 500 Index ($SPX) is no longer the diversified benchmark it once was, as a handful of tech giants like Nvidia (NVDA) and Meta (META) now dominate the index. With some 25 names comprising nearly half of the S&P’s weight, this concentration has led Nygren to seek opportunities in undervalued sectors, particularly outside the dominant tech space, where he sees more potential for long-term growth.
Specifically, Nygren called out the investing opportunity in companies that actively use excess capital to repurchase their own stock, and spotlighted Corebridge Financial, Inc. (CRBG) as a compelling value stock that’s flying under the radar. Recently spun off from American International Group (AIG), this retirement and life insurance firm trades at a modest per-share price, but Nygren sees it reaching a book value of $50 by the end of next year.
Emphasizing the company’s potential to repurchase around 20% of its shares annually, Nygren notes that Corebridge doesn't need widespread recognition from other investors to unlock its value. The company’s strategy of continually reducing the float positions makes it an enticing opportunity in the financial sector that is waiting to be discovered. Keeping these factors in mind, let’s take a closer look at this stock.
About Corebridge Financial Stock
Founded in 1998, Houston-based Corebridge Financial, Inc. (CRBG) is one of the largest and most established providers of retirement solutions and insurance products in the United States, with a long-standing reputation for excellence and a commitment to helping clients achieve their financial aspirations. With a diverse portfolio that spans Individual Retirement, Retirement Services, Life Insurance, and Institutional Markets, Corebridge offers tailored solutions to meet the unique needs of its clients.
Boasting over $390 billion in assets under management (AUM) as of June 30, the company empowers individuals to take charge of their financial futures. Valued at roughly $17 billion by market cap, shares of this retirement and life insurance company have gained 42.3% over the past year, outpacing the broader SPX’s return of 33% over the same time frame. Plus, in 2024, CRBG stock is up roughly 31%, soaring beyond the SPX’s 19.6% gain on a YTD basis.
On Sept. 30, the company paid its shareholders a quarterly dividend of $0.23 per share. This brings its annualized dividend to $0.92 per share, offering a yield of 3.22%.
Apart from dividends, Corebridge has been proactive in returning value to shareholders through share buybacks. During Q2, the company returned $575 million to shareholders through a combination of dividends and buybacks, including $436 million in share repurchases alone. In fact, the company has successfully bought back around $940 million worth of shares year to date through July 31.
Moreover, with CRBG trading at just 6.13 times forward earnings and 0.81 times sales, well below the financial sector medians, the stock appears to be a compelling value at current levels.
A Closer Look at CRBG’s Q2 Financials
Corebridge released its Q2 earnings results on July 31, with adjusted operating EPS of $1.13 up 8.7% year-over-year growth to surpass analysts' projections. Premiums and deposits reached a decade-plus high of $11.7 billion - up 17% year over year, or 37% excluding transactional activity. CRBG’s adjusted book value per common share was $37.95, up from $36.44 a year ago.
CEO Kevin Hogan said, “We continue to grow aggregate core sources of income with our ability to deploy resources where customer demand is the greatest and risk-adjusted returns are the most attractive.”
As of June 30, the company holds an impressive liquidity position of approximately $1.9 billion and boasts a solid financial leverage ratio of 28.4%, ensuring stability while effectively managing debt.
While the company didn’t offer formal guidance in its latest earnings release, analysts tracking Corebridge Financial project the company’s bottom line to improve 15.1% year over year to $4.72 per share in fiscal 2024 and climb another 21.4% annually to $5.73 per share in fiscal 2025.
What Do Analysts Expect for Corebridge Financial Stock?
Overall, Wall Street is optimistic about CRBG stock, with a consensus “Moderate Buy” rating. Out of the 15 analysts offering recommendations, seven advise a “Strong Buy,” two suggest a “Moderate Buy,” and the remaining six analysts advocate a “Hold.”
The mean price target for CRBG is $33.92, indicating an upside potential of around 19.4% from current levels. The Street-high target price of $39 implies that the stock could rally as much as 37.2% from here.
On the date of publication, Anushka Mukherji did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
