Over the past six months, Brighthouse Financial has been a great trade, beating the S&P 500 by 20.2%. Its stock price has climbed to $60.28, representing a healthy 23.3% increase. This run-up might have investors contemplating their next move.
Is there a buying opportunity in Brighthouse Financial, or does it present a risk to your portfolio? Get the full stock story straight from our expert analysts, it’s free.
Why Do We Think Brighthouse Financial Will Underperform?
We’re happy investors have made money, but we're cautious about Brighthouse Financial. Here are three reasons we avoid BHF and a stock we'd rather own.
1. Declining Net Premiums Earned Reflect Weakness
When insurers sell policies, they protect themselves from extremely large losses or an outsized accumulation of losses with reinsurance (insurance for insurance companies). Net premiums earned are therefore gross premiums less what’s ceded to reinsurers as a risk mitigation and transfer strategy.
Brighthouse Financial’s net premiums earned has declined by 7.7% annually over the last five years, much worse than the broader insurance industry. This shows that policy underwriting underperformed its other business lines.
2. Growing BVPS Reflects Strong Asset Base
In the insurance industry, book value per share (BVPS) provides a clear picture of shareholder value, as it represents the total equity backing a company’s insurance operations and growth initiatives.
Although Brighthouse Financial’s BVPS declined at a 11.1% annual clip over the last five years. the good news is that its growth inflected positive over the past two years as BVPS grew at an incredible 33.1% annual clip (from $62.89 to $111.33 per share).
The debt-to-equity ratio is a widely used measure to assess a company's balance sheet health. A higher ratio means that a business aggressively financed its growth with debt. This can result in higher earnings (if the borrowed funds are invested profitably) but also increases risk.
If debt levels are too high, there could be difficulties in meeting obligations, especially during economic downturns or periods of rising interest rates if the debt has variable-rate payments.
Brighthouse Financial currently has $7.50 billion of debt and $6.36 billion of shareholder's equity on its balance sheet, and over the past four quarters, has averaged a debt-to-equity ratio of 1.3×. We think this is dangerous - for an insurance business, anything above 1.0× raises red flags.
Final Judgment
We cheer for all companies serving everyday consumers, but in the case of Brighthouse Financial, we’ll be cheering from the sidelines. With its shares outperforming the market lately, the stock trades at 0.7× forward P/B (or $60.28 per share). While this valuation is optically cheap, the potential downside is huge given its shaky fundamentals. There are better stocks to buy right now. Let us point you toward a safe-and-steady industrials business benefiting from an upgrade cycle.
Stocks We Would Buy Instead of Brighthouse Financial
ONE MORE THING: Top 6 Stocks for This Week. This market is separating quality stocks from expensive ones fast. AI taking down whole sectors with no warning. In a rotation this fast, you need more than a list of good companies.
Our AI system flagged Palantir before it ran 1,662%. AppLovin before it ran 753%. Nvidia before it ran 1,178%. Each week it produces 6 new names that pass the same tests. Get Our Top 6 Stocks for Free HERE.
Stocks that have made our list include now familiar names such as Nvidia (+1,326% between June 2020 and June 2025) as well as under-the-radar businesses like the once-small-cap company Comfort Systems (+782% five-year return). Find your next big winner with StockStory today.
