Equitable Holdings Reports Strong Third Quarter Results with Growth in Key Segments

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Equitable Holdings Reports Strong Third Quarter Results with Growth in Key Segments

Leading financial services company Equitable Holdings, Inc. (EQH) reported a significant increase in non-GAAP operating earnings for the third quarter. The company's earnings rose 34% year-over-year to $501 million, or $1.53 per share. The adjusted non-GAAP earnings per share increased by 22% to $1.59, surpassing expected growth rates.

Assets under management exceeded $1 trillion, marking a 20% growth compared to the previous year. Equitable Holdings' strategic initiatives, including partnerships and product offerings, contributed to this performance, positioning the company for continued growth in the competitive U.S. retirement market.

Key Points:

  • Non-GAAP operating earnings rose 34% year-over-year to $501 million, or $1.53 per share.
  • Adjusted non-GAAP earnings per share increased by 22% to $1.59, exceeding growth guidance.
  • Assets under management exceeded $1 trillion, reflecting a 20% increase from last year.
  • $330 million was returned to shareholders, maintaining a 65% payout ratio.
  • Sales in the retirement segment increased by 25% year-over-year, with net inflows of $1.7 billion recorded.
  • Wealth Management reported record net advisory fees of $1.9 billion.
  • CEO Mark Pearson highlighted positive demographic trends and strategic partnerships.

Company Outlook:

  • Full-year cash generation is expected to be at the upper end of the guidance at $1.4 billion to $1.5 billion.
  • A target of $2 billion in cash generation is set for 2027.
  • An operating margin of 33% is anticipated by 2025, with further expansion potential.
  • The insurance tax rate is expected to be below 17% for 2024, returning to 17% in 2025.

Challenges:

  • Increased competition in the RILA sector is acknowledged.
  • Policy cancellation activity has risen due to current interest rates in the Individual Retirement segment.

Positives:

  • Strong growth in the Individual Retirement segment, particularly in the RILA market.
  • Net interest margin (NIM) in Individual Retirement increased by 5% year-over-year.
  • Alternatives portfolio provided a 6% annual return in the third quarter.
  • Positive market conditions were recorded for retirement products.

Shortcomings:

  • No expected inflow from the BlackRock LifePath Paycheck product in Q4 2023.
  • Quarterly fluctuations in NIM are anticipated due to a $60 billion RILA block.

Q&A Highlights:

  • The CEO expresses confidence in growth despite potential market share declines.
  • Full-year cash flow guidance is supported by an anticipated extraordinary dividend in Q4.

Equitable Holdings demonstrated strong financial performance in Q3 2024 with significant increases in operating earnings and assets under management. The company's strategic approach focused on retirement solutions and asset management yielded positive results, as evidenced by substantial net inflows in these segments. Confidence in the management team's growth strategy and outlook on cash generation and operating margins reflects the company's strong market position. Despite challenges like increased competition and policy cancellations, Equitable Holdings appears well-positioned to leverage demographic trends and market demand, charting a clear path toward achieving financial goals in the coming years.

InvestingPro Insights: Equitable Holdings' strong financial performance in Q3 2024 is backed by recent data from InvestingPro. The company's market capitalization stands at $15.44 billion, reflecting its significant footprint in the financial services sector.

One suggestion from InvestingPro highlights Equitable Holdings' commitment to increasing dividends for six consecutive years, aligning with the company's value-returning strategy to shareholders. This is especially notable considering the $330 million returned to shareholders while maintaining a 65% payout ratio. The current dividend yield of 2.16% may appeal to income-focused investors.

Another relevant InvestingPro tip indicates that the management is aggressively repurchasing shares. This strategy, in conjunction with the dividend policy, underscores the company's focus on shareholder returns, consistent with the positive outlook presented in the earnings report.

The company's financial health is further underscored by an InvestingPro tip indicating that liquid assets exceed short-term liabilities. This strong liquidity position supports Equitable Holdings' ability to pursue growth opportunities and navigate market challenges.

It's also important to note that Equitable Holdings has been trading near its 52-week highs and has delivered an impressive total price return of 71.9% over the past year. This performance aligns with the growth reported in assets under management and improving earnings.

For investors seeking a more comprehensive analysis, InvestingPro offers 11 additional tips for Equitable Holdings, providing deeper insights into the company's financial position and market performance.