PM Images Shares of Jackson Financial ( NYSE: JXN ) have been a tremendous performer over the past year, more than doubling, as buoyant equities and rising rates have created very favorable conditions for its annuity business. I have consistently been bullish on JXN, reiterating it as a “ strong buy ” in March, and since that analysis, shares are up 20%, more than double the S&P 500’s return. Given how much it has rallied, it is reasonable to ask whether investors should now take some profits, especially with shares near my $75-80 price target.
Seeking Alpha I reached my $75-80 price target based on my expectation for at least $625 million of capital returns this year. Given the perceived riskiness of its legacy variable annuity exposure, I have felt a discounted valuation would likely persist, justifying a relatively high 10% capital return yield. Importantly, Jackson’s results continue to meet, or even slightly exceed, my expectations.
In the company’s first quarter , Jackson earned $4.23 in operating earnings per share, up from $3.15 last year.
Its $334 million in operating earnings was also up from $204 million in Q4, aided by lower death benefits and a $60 million actuarial adjustments in Q4. When looking at Jackson’s financials, I urge investors to look at operating, not GAAP results, as GAAP includes mark-to-market movements that create volatility away from economic reality. For instance, GAAP earnings included $427 million of pre-tax hedge gains, which wil.
