Assessing Brighthouse Financial: Continued Appeal Post-Strong Performance and Capital Strategy Changes
If you are wondering whether Brighthouse Financial is still a smart idea after its big run, or if you may be late to the party, this breakdown will help you consider whether the current price really matches the underlying value.
The stock has cooled slightly in the short term, slipping about 0.3% over the last week and 1.0% over the last month. However, zooming out, year to date it is still up 36.2%, with a 28.0% gain over the last year and 94.0% over five years.
Recent headlines have focused on Brighthouse Financial refining its capital management strategy and continuing to return cash to shareholders, which can influence how investors think about both risk and potential upside. At the same time, the broader life insurance and annuities space has been in the spotlight as markets reassess how higher-for-longer interest rates affect long term liabilities and investment income.
Right now Brighthouse Financial scores a 4 out of 6 on our valuation checks. This suggests the market may not be fully pricing in its fundamentals. Next, we will unpack how different valuation methods see the stock, before circling back to a more intuitive way to think about what it may really be worth.
The Excess Returns model looks at how much profit Brighthouse Financial can generate above the return that shareholders reasonably demand, based on the company’s equity risk. Instead of just focusing on earnings multiples, it weighs the profitability of each dollar of equity against its cost.
For Brighthouse Financial, the starting point is a Book Value of $111.33 per share and a Stable EPS of $7.74 per share, derived from the median return on equity over the past five years. Against this, the Cost of Equity is estimated at $10.33 per share, which implies an Excess Return of $-2.59 per share and an Average Return on Equity of 7.41% on a Stable Book Value of $104.49 per share, based on estimates from four analysts.
When these economics are projected forward and discounted, the Excess Returns model points to an intrinsic value of about $65.40 per share, implying the stock is roughly 0.1% undervalued versus its current price.
Result: ABOUT RIGHT
Brighthouse Financial is fairly valued according to our Excess Returns, but this can change at a moment’s notice. Track the value in your watchlist or portfolio and be alerted on when to act.
For a profitable company like Brighthouse Financial, the price to earnings ratio is a practical way to gauge whether investors are paying a reasonable price for each dollar of current earnings. In general, faster earnings growth and lower perceived risk justify a higher PE, while slower growth or higher uncertainty should translate into a lower, more conservative multiple.
Brighthouse Financial currently trades on a PE of about 4.3x, which is well below both the Insurance industry average of around 12.8x and the peer group average of roughly 10.2x. On the surface, that wide discount might suggest the market is skeptical about the durability or quality of its earnings.
To refine that picture, Simply Wall St uses a proprietary Fair Ratio, which estimates what PE the stock should trade on after factoring in its earnings growth outlook, profitability, risk profile, industry positioning and market cap. For Brighthouse Financial, this Fair Ratio sits much higher at about 17.5x, implying the current valuation does not fully reflect those fundamentals. Because this tailored metric adjusts for company specific strengths and risks, it can be a more reliable guide than simple comparisons with peers or the industry average, and it points to meaningful upside from today’s multiple.
Earlier we mentioned that there is an even better way to understand valuation. Let us introduce you to Narratives, a simple framework on Simply Wall St’s Community page that lets you connect your view of Brighthouse Financial’s story to concrete forecasts for its future revenue, earnings and margins. You can then compare a resulting Fair Value with today’s share price to help you decide whether to buy, hold or sell. The Narrative automatically refreshes as new news or earnings arrive. For example, one investor might build a bullish Brighthouse Financial Narrative that assumes earnings climb toward the higher end of expectations and justify a Fair Value closer to the top analyst target of about $72. A more cautious investor might emphasize capital constraints, acquisition uncertainty and earnings volatility, leading them to a lower Fair Value nearer $42. Both explanations remain transparent, data-backed and easy to track as conditions change.
NasdaqGS:BHF Earnings & Revenue History as at Dec 2025
This article by Simply Wall St is general in nature. We provide commentary based on historical data 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 financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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