A Look At Aflac (AFL) Valuation After Q4 Earnings Miss And Dividend Hike

Simply Wall St.

Feb 09

Aflac (AFL) is back in focus after its fourth quarter 2025 earnings update, where lower net investment income and higher operating costs weighed on results, even as Japan sales, dividend growth, and ...

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This suggests momentum has been building...","collect":0,"end_time":0,"defaultTopTitle":"simplywall.st","property":["earning"],"viewcount":null,"language":"en","relate_stocks":{"AFL":"美国家庭寿险","AFL.AU":"AF LEGAL GROUP"},"translate_title":"第四季度盈利未达预期和股息上调后Aflac(AFL)估值一览","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"AFL":1.5,"AFL.AU":1.5},"content_text":"Aflac (AFL) is back in focus after its fourth quarter 2025 earnings update, where lower net investment income and higher operating costs weighed on results, even as Japan sales, dividend growth, and buybacks attracted attention. See our latest analysis for Aflac. Despite the earnings miss, Aflac's recent news around dividend growth and heavy buybacks has come alongside a 7.2% 1 month share price return and a 15.6% 1 year total shareholder return. This suggests momentum has been building rather than fading. If this update has you thinking about where else capital might work hard for you, it could be worth scanning 22 top founder-led companies as a fresh set of ideas beyond insurers. With Aflac trading at $117.15, roughly 5% above the average analyst price target but screening as about 33% below some intrinsic value estimates, investors may question whether there is still a buying opportunity or whether the market is already pricing in future growth. AdvertisementMost Popular Narrative: 5.8% Overvalued Against Aflac's last close at $117.15, the most followed fair value narrative sits at about $110.69. This frames the current price as sitting modestly above that estimate while still tied to detailed views on growth, margins, and capital returns.  Increased adoption of digital underwriting, customer-facing Gen AI, and digital human avatar initiatives in both Japan and the U.S. is expected to lower long-term operational costs and improve customer engagement, with the potential to materially expand net margins through enhanced efficiency and better scalability.  Read the complete narrative. Curious what kind of revenue path and margin profile need to line up to support that fair value, and how much multiple compression is already baked in? The most followed narrative lays out a detailed earnings glide path, share count assumptions, and a specific future P/E that have to come together for this price to make sense. Result: Fair Value of $110.69 (OVERVALUED) Have a read of the narrative in full and understand what's behind the forecasts. However, that story depends on Japan premiums stabilising and technology spending delivering real efficiencies. Weaker Japan trends or stickier costs could quickly challenge this setup. Find out about the key risks to this Aflac narrative. Another Take: Cash Flows Point the Other Way While the most popular narrative pegs Aflac at about $110.69 and calls the shares 5.8% overvalued, our DCF model lands in a very different place, with a future cash flow value of $175.38 per share that frames the current $117.15 price as materially undervalued. Which story is more persuasive likely depends on how comfortable you are with the long term cash flow assumptions used in that DCF. Look into how the SWS DCF model arrives at its fair value. AFL Discounted Cash Flow as at Feb 2026Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Aflac for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 52 high quality undervalued stocks. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.  Build Your Own Aflac Narrative If you look at these numbers and reach a different conclusion, or simply prefer to test your own view, you can build a full thesis yourself in just a few minutes, starting with Do it your way. A good starting point is our analysis highlighting 2 key rewards investors are optimistic about regarding Aflac. Looking for more investment ideas? If Aflac is already on your radar, it is worth lining up a few other candidates so you are not relying on a single story.  Target reliable income potential by scanning for companies in our 14 dividend fortresses that prioritise steady shareholder payouts. Hunt for quality at a sensible price using the 52 high quality undervalued stocks to spot businesses that may not be fully appreciated by the market. Stay one step ahead by reviewing our screener containing 24 high quality undiscovered gems, where you might find strong fundamentals before they are widely talked about.   This article by Simply Wall St is general in nature. We provide commentary based on historical data\n    and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your\n    financial situation. We aim to bring you long-term focused analysis driven by fundamental data.\n    Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.\n    Simply Wall St has no position in any stocks mentioned.New: Manage All Your Stock Portfolios in One PlaceWe've created the ultimate portfolio companion for stock investors, and it's free.• Connect an unlimited number of Portfolios and see your total in one currency• Be alerted to new Warning Signs or Risks via email or mobile• Track the Fair Value of your stocksTry a Demo Portfolio for FreeHave feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com","kind":"highlight","is_publish_news":true,"is_publish_highlight":false,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"-1","news_tag":"dataReport","news_rank":0,"symbols":[],"gpt_button":0,"need_auth":false,"code":"91000000","status":"200"}}}