Aflac (NYSE:AFL)

Aflac, founded in 1955, is an American company based in Columbus, Georgia, that sells life insurance and health insurance in the United States and Japan. Since 1999, Aflac has been recognized for the success of a good marketing strategy that included the creation of a mascot: a white duck (resembling a goose), which now appears in its logo and is present in all its advertising campaigns.

The company

Aflac Incorporated is the largest provider of supplemental insurance in the United States. The company claims to insure one in four Japanese households. 73% of the company's revenue comes from its Japanese segment, while the remaining 27% comes from its US operations. All of AFLAC's revenues from Japan are converted into dollars for financial reporting. An increase in the JPY against the USD therefore has a positive impact on revenues.

Since 2000, the company's image has become more widely recognized as a result of advertisements featuring the Aflac duck, which quacks the company's name. The duck concept was created by the Kaplan Thaler Group, a New York City-based advertising agency. One of the agency's art directors came across the idea for the duck while walking around Central Park, saying "Aflac, Aflac." He quickly realized how much the company's name resembled the quacking of a duck. The Aflac duck has appeared in over 30 commercials and is enshrined on the Madison Avenue Walk of Fame as one of America's favorite advertising icons.

The title

The long-term average yield is 2.23%, which is decent. The price-to-earnings ratio confirms this attractive valuation, with 9.20. The annual dividend growth is also attractive, with 11.66%. The company has increased its shareholder payouts for 28 consecutive years, which proves the robustness of their business model. distribution ratio is very cautious, with 31.55%, leaving plenty of room for the company to continue increasing its dividend, even in the event of a difficult passage.

To these already attractive figures, we add an exceptional performance of the title compared to the market, since 1985Despite a terrible plunge between 2008 and 2009, during the financial crisis, the stock recovered very well afterwards.

Unfortunately, this excellent performance comes at a particularly heavy price at Aflac, through too great a risk in our eyes. Thus, the volatility amounts to 21.47%, which is significantly higher than the average of our portfolio and even higher than that of the market. The beta also displays a very high sensitivity to the latter, with 1.77.

The title also does not offer sufficient protection against fluctuations in the dollar, despite its significant turnover in Japan.

Conclusion

Aflac has attractive fundamentals, but the risk that the stock poses in terms of volatility, market sensitivity and the dollar is too high in our eyes. Let us recall that our emotions are our worst enemies when it comes to investing and we prefer to avoid tickling them when we can.. On the other hand, the title could very well suit a more daring investor who is used to playing with this type of risky investment.

 

 

Sources: wikipedia.org, wikinvest.com, yahoo.com, swissquote.ch, dividends.ch