Corebridge: A Solid Value And Dividend Story Emerging (NYSE:CRBG)

IPO stocks have been among the worst sections of the market to be exposed to over the last year. The Renaissance IPO ETF (IPO) is chock full of formerly hot tech and consumer names.

Today’s IPO is much less exciting. One recent spinoff from AIG is a retirement solutions company that nobody would describe as sexy. Still, I see strong EPS growth, an expanding dividend, and even price outperformance versus the S&P 500.

IPOs Struggle YoY, but CRBG Up Relative to SPY Thus Far

According to Bank of America Global Research, Corebridge (NYSE:CRBG) is one of the largest life insurance companies in the United States. Historically, it comprised the life insurance operations of AIG. The firm offers various life & retirement protection products across four segments: Individual Retirement, Group Retirement, Life Insurance, and Institutional Markets. Its diversification across market segments, earnings sources, and distribution channels distinguish it from its peers.

The Texas-based $14.1 billion market cap Diversified Financial Services industry company within the Financials sector trades at a near-market 16.9 trailing 12-month GAAP price-to-earnings ratio when adjusting for the recent spinoff from AIG. The stock also pays a high 4.2% dividend yield, according to The Wall Street Journal. Corebridge just recently announced a $0.23 quarterly dividend.

When combining all of the valuation metrics looking ahead for Corebridge, the stock trades at a discount to its peers. Earnings are expected to grow big in 2023 and 2024. BofA likes the company’s execution and strong capital management during this uncertain environment. Moreover, an above-average dividend yield appears sustainable based on positive free cash flow.

Still, with a very small float right now, expect volatility with this recent IPO. Upside potential stems from rising interest rates, additional shareholder accretive activities, and cross-functional synergies from its partnership with Blackstone. There are downside risks, though, including a protracted bear market, lower interest rates triggered by a recession, and poor management. Seeking Alpha reported that Corebridge beat bottom-line expectations in its Q3 report earlier this month.

As mentioned with the valuation, normalized earnings look to rise big in the coming quarters post-IPO. The Bloomberg consensus forecast is close to what BofA projects. The CRBG dividend, meanwhile, is seen as growing at a solid rate through 2024. If we use 2023 operating and GAAP earnings, both of its P/E multiples appear attractive at 6.4x. While there is uncertainty about how per-share profits will verify, I like the valuation here given the growth prospects.

Corebridge: Earnings, Valuation, Dividend Yield Forecasts

Looking ahead, corporate event data provided by Wall Street Horizon show a few key dates investors should monitor. First, there is an ex-dividend date on Thursday, December 15. Later comes its Q4 2022 earnings date which is unconfirmed to take place Thursday, March 9, 2023, BMO. Finally, the IPO lock-up period expires on Monday, March 13, 2023. IPO lock-up expirations can sometimes result in shares hitting the market, which is thought to be bearish.

Corporate Event Calendar

The Technical Take

With a limited trading history, I used an hourly chart on CRBG. There’s support in the $21.3 to $21.6 range, while sellers were found above $23. It’s a tight formation and a limited float, so any breakout or breakdown could really send the stock moving. Also, take notice of some bearish divergence between price and RSI at its high last week – that is a sign of more possible weakness in the near term. Overall, I think being long the stock here with a stop under $21 makes sense. Traders can also be long with a stop under the September low of $18.92.

CRBG: Stock Steady Post-IPO, Near Support After A Bearish Divergence

The Bottom Line

I like the growth outlook with Corebridge. While there are macro risks to the stock and a limited float causing idiosyncratic uncertainty, the valuation is compelling, and shares are off to a solid start following its spinoff from AIG in September.