We came across a bullish thesis on Aflac Incorporated (AFL) on Substack by Pacific Northwest Edge. In this article, we will summarize the bulls’ thesis on AFL. Aflac Incorporated (AFL)’s share was trading at $111.75 as of April 3rd. AFL’s trailing and forward P/E were 11.60 and 16.53 respectively according to Yahoo Finance.
An elderly customer discussing her retirement options with a smiling life insurance agent.
Aflac stands out as a remarkably resilient and shareholder-friendly insurance business, well-positioned amid ongoing market volatility. The company generates roughly 70% of its revenue from Japan, making currency fluctuations an important factor. However, its core operations remain strong, and the impact of Yen-Dollar exchange rates on reported cash flow does not reflect operational weakness. In fact, Aflac continues to execute at a high level, backed by a conservative cost structure, with just $200 million in annual operating expenses as of December 2024, against a cash position of $6.2 billion. This capital-light model allows Aflac to return significant value to shareholders without compromising financial stability. Its long and disciplined history of share buybacks is particularly compelling—Aflac has been reducing its share count consistently for decades, and with its current low P/E ratio, those buybacks are especially accretive. Even during periods of Yen weakness, the company accelerated buybacks, demonstrating conviction in its strategy and confidence in its long-term value. Aflac also pays a steady dividend, currently yielding around 2%, further enhancing its appeal as a defensive compounder. Importantly, this capital return is not a sign
of management neglect; rather, it reflects the efficiency and maturity of the business. Unlike asset-heavy sectors, insurance companies like Aflac can generate substantial free cash flow without large reinvestment needs, making shareholder returns sustainable over time. The company’s stock has recently outperformed during a market pullback, signaling investor recognition of its quality and defensiveness. With a consistent management approach, strong balance sheet, sticky customer base in Japan and the U.S., and an ongoing commitment to buybacks and dividends, Aflac offers a compelling mix of stability and capital efficiency. As markets remain under pressure from macro shocks like newly announced tariffs, Aflac’s profile becomes even more attractive, offering upside potential with limited downside risk.
Aflac Incorporated (AFL) is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 31 hedge fund portfolios held AFL at the end of the fourth quarter which was 32 in the previous quarter. While we acknowledge the risk and potential of AFL as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than AFL but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article was originally published at Insider Monkey.