We came across a bullish thesis on Jackson Financial Inc. (JXN) on Shade Research’s Substack by Tiago Dias. In this article, we will summarize the bulls’ thesis on JXN. Jackson Financial Inc. (JXN)’s share was trading at $98.89 as of Nov 21st. JXN’s trailing P/E was 3.31 according to Yahoo Finance.
An image of a man and a woman signing an annuity agreement, showing the commitment of the company.
Jackson Financial (JXN) is an undervalued player in the annuities market, providing retirement savings and income solutions primarily in the U.S. Spun off from Prudential’s U.S. annuity operations, JXN benefits from a diversified suite of products, including variable annuities, registered index-linked annuities (RILAs), and fixed annuities. The company’s unique features, such as a broad range of investment options, have driven its strong market presence and consistent customer appeal. JXN operates through three core segments: Retail Annuities, Institutional Products, and Closed Life and Annuity Blocks, with Retail Annuities as the primary contributor to assets and sales. This segment’s fee-based revenue structure provides stability, reducing exposure to market volatility while enhancing long-term profitability.
Despite its strong operational framework, JXN’s stock trades at a significant discount due to lingering investor concerns about past issues, including material weaknesses in disclosure controls and financial reporting. However, these concerns have been addressed, with the company remediating its controls by the end of 2023, restoring confidence in its governance. This, combined with JXN’s robust financial position, makes it a compelling investment case. Key valuation metrics underscore this opportunity: a P/E ratio of 7.7, price-to-book ratio of 0.7, and tangible book value per share of $125, highlighting a clear mispricing relative to its intrinsic value.
Shade Research’s valuation adopts a sum-of-the-parts (SOTP) approach, separating JXN’s fee business and net asset value. The fee business, which generates stable cash flows from managing annuities and customer assets, is conservatively valued at $59.49 per share, reflecting normalized earnings and a steep discount rate of 14.8%. The net asset value, primarily driven by investments, is estimated at $82.58 per share, based on a prudent assessment of asset quality and market risk. Together, these segments yield a net present value of $142 per share, suggesting significant upside from the current share price of $90.
For long-term investors, JXN offers an attractive combination of value and growth potential. Its undervaluation provides a margin of safety, while its high-margin fee business and disciplined capital management position it well for future performance. With a dividend yield of 3.1% and a track record of operational resilience, JXN represents a rare opportunity to invest in a high-beta company at a steep discount to intrinsic value. The combination of stability, profitability, and a clear path to growth justifies a bullish stance, making it an attractive buy at current levels.
Jackson Financial Inc. (JXN) is not on our list of the 31 Most Popular Stocks Among Hedge Funds. As per our database, 30 hedge fund portfolios held JXN at the end of the third quarter which was 31 in the previous quarter. While we acknowledge the risk and potential of JXN 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 JXN 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.