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Equitable Holdings - $EQH - Earnings Analysis: Strong growth in earnings and cash generation.

By sagebytes in Finance —

Business Model

Equitable Holdings operates through three main segments: Retirement (Individual and Group), Asset Management (AllianceBernstein), and Wealth Management. Revenue is generated through policy charges, fees, premiums, investment management and service fees, and other income.

Revenue Sources

  • Policy charges and fee income from retirement and protection products.
  • Premiums from insurance products.
  • Net investment income from the general account.
  • Investment management and service fees from AllianceBernstein.
  • Advisory and distribution fees from Wealth Management.

Income Statement Analysis

  • Total Revenues increased significantly in Q4 2024 compared to Q4 2023, driven primarily by net derivative gains and investment management and service fees.
  • Total Benefits and Other Deductions decreased in Q4 2024, contributing to the overall improvement in profitability.
  • Net income attributable to Holdings increased due to higher revenues and decreased deductions.

Balance Sheet Analysis

  • Total assets increased year-over-year, driven by growth in investments and separate account assets.
  • Total liabilities also increased, primarily due to growth in policyholders’ account balances.
  • Total equity attributable to Holdings decreased

Capital Allocation

Equitable Holdings is focused on deploying capital to new business, particularly in the individual retirement business. The company is also returning capital to shareholders through dividends and share repurchases.

Management Commentary

Full year Non-GAAP operating earnings per share of $5.93 increased 29% from 2023 and was up 20% excluding notable items, above our 12-15% target.

Equitable’s integrated business model positions us well to benefit from the tremendous growth in the US retirement market and the need for advice-driven solutions.

Looking forward, we expect our strong momentum to continue in 2025. We forecast Non-GAAP operating EPS growth to be consistent with our 12-15% target and project cash generation to increase to $1.6-1.7 billion, supported by organic growth across our Retirement, Asset Management, and Wealth Management businesses and continued execution against our strategic initiatives.

Overall Sentiment: Positive, with a focus on growth and strategic initiatives.

Recommendation

Rating: Hold

Reason for Rating: Equitable Holdings is performing well and delivering on its financial targets, but there are some concerns about the high level of liabilities and dependence on the performance of AllianceBernstein.

Disclaimer: This analysis is based on company filings and public information. It is for informational purposes only and not financial advice. Past performance does not guarantee future results.

Generated on: 2/8/2025, 1:30:06 PM