In my report three months ago I noted that:
'Using the Q3 numbers out today, the underlying business produced a return on equity of just over 9% and the company is targeting 12-13% by 2016. And the price:book value of the shares today?: x0.75...Now ING parent company does retain a 59% stake and they have been and will continue to cut this over time. But this sort of multiple has taken a lot of that into account...The Voya share has done very well, adding over US$10 from its US$19 odd launch price in a short period of time. The above analysis suggests that investors should ignore this sharp move over recent moves and build a position. Watch especially for a break above US$32 into new high territory'
Well the shares did break above US$32 - and have stayed above that level in the interim period.
This optimism seems well-placed judging by the initial earnings headline:
ING U.S. (VOYA): Q4 EPS of $0.75 beats by $0.05
So what were the other key factors in the release today? Well FY13 return on equity was 10.3% which was another sequential improvement and the aforementioned 12-13% target was reiterated.
Divisionally the key driver remains the retirement / annuities business which accounted for all the sequential change year-on-year in the Q4 results.
In terms of specifics, in the Retirement division there was continued good flows...
If I look at Voya's book value per share it was US$43.65 at the end of December 2013. An insurance company that sustainably generates a 10%+ return on equity is worth a US$43.65+ share price in my view. The only adjustment in my view would be the continued overhang from the ING parent business who will periodically sell down their (current) 59% stake. Even taking a 20% discount for this, Voya shares should trade at US$36+.
Any placing by ING is clearly a specific opportunity but generally, on the basis of these numbers and taking into account the (slow) selling parent holder, Voya shares should be in the US$36-40 range.
Voya: still a strange name, still an interesting stock.