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Voya (VOYA) Surges 6.5%: Is This an Indication of Further Gains?

Voya (VOYA) saw its shares surge in the last session with trading volume being higher than average. The latest trend in earnings estimate revisions may not translate into further price...

This story originally appeared on Zacks

Voya Financial (VOYA) shares ended the last trading session 6.5% higher at $67.38. The jump came on an impressive volume with a higher-than-average number of shares changing hands in the session. This compares to the stock's 4.3% loss over the past four weeks.

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The surge is primarily driven by the announcement that VOYA will be a part of S&P MidCap 400 effective Tuesday, Dec 28, 2021.

Voya Financial continues to grow banking on solid performance across Wealth Solutions, Investment Management and Health Solutions. These businesses are higher-growth, higher-return, capital-light businesses boasting a solid presence. It expects adjusted EPS growth of 12-17% through 2024.

Expansion of distribution network and achievement of efficiencies through automation should help the company outperform the industry. Net revenue growth of 4-6%, margin expansion of 1-2%, and prudent capital management should help Voya Financial achieve the financial target for 2024. Prudent capital management includes the realization of 90 to 100% free cash flow conversion in the next three years and operating return on equity between 14% and 16%.

This retirement, investment and insurance company is expected to post quarterly earnings of $1.54 per share in its upcoming report, which represents a year-over-year change of +6.9%. Revenues are expected to be $269 million, down 32.4% from the year-ago quarter.

Earnings and revenue growth expectations certainly give a good sense of the potential strength in a stock, but empirical research shows that trends in earnings estimate revisions are strongly correlated with near-term stock price movements.

For Voya, the consensus EPS estimate for the quarter has remained unchanged over the last 30 days. And a stock's price usually doesn't keep moving higher in the absence of any trend in earnings estimate revisions. So, make sure to keep an eye on VOYA going forward to see if this recent jump can turn into more strength down the road.

The stock currently carries a Zacks Rank 3 (Hold). You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>

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