Finance of America Targets Annualized Earnings of $4 to $5 per Share in 2027
Key Facts
Finance of America set a target for an annualized adjusted earnings per share rate of $4 to $5 in the second half of 2027, citing a return of margins toward normal levels and continued business volume growth, according to its third-quarter results presentation published on November 3. The target follows adjusted earnings of $0.28 per share in the third quarter, compared with the analyst consensus estimate of $1.26. Results showed a divergence between financing growth and declining profitability, as financing volume rose during the quarter while retirement solutions margins narrowed. Chief Executive Graham Fleming said the company had made the necessary product pricing adjustments and expects margins to return to historical levels in the first half of 2027. Margin recovery and business growth underpin the annualized target the company set for the second half of next year.
Financing volume reached $748 million in the third quarter, up 24% year over year, while the total from the start of 2026 through the end of September reached $2.1 billion. That total was up 17% from $1.8 billion in the same period of 2025. Fleming said the company had increased financing volume at an average annual rate of 20% since 2023, alongside product expansion and growth in its distribution network. Financing growth provides an operating backdrop for the company's outlook, but coincided in the third quarter with a decline in the retirement solutions revenue margin to 9.0%. The margin was 10.6% in the first half of 2026 and 11.3% in the year-earlier period.
Management attributed margin pressure to the timing effect of rising interest rates, saying the yield on the 10-year U.S. Treasury rose by more than 75 basis points during the third quarter, putting pressure on fair values and margins. In response, management expects margins to return toward their historical average of about 10.7% during the first half of 2027. Fleming said product pricing adjustments had been made and their effects would become visible as they flowed through the business pipeline. Management expects fourth-quarter 2026 adjusted earnings to be near third-quarter levels, as pricing adjustments continue to flow through the business pipeline. Fourth-quarter results therefore remain a near-term indicator of the margin recovery path management expects.
The company withdrew its previous fiscal 2026 adjusted earnings per share guidance, which targeted a range of $4.50 to $5.00. It is replacing that with an interim target for 2027, linking the targeted annualized earnings rate to margin recovery and continued business growth. The company also expects fiscal 2027 financing volume to range from $3.1 billion to $3.4 billion, an expected increase of 10% to 20% from its estimate of $2.8 billion for 2026. Margins and financing volume are key components of the path management outlined for reaching its earnings target. The company is targeting a return to historical margins in the first half of 2027, before reaching its targeted annualized earnings per share rate in the second half.
The quarterly results and outlook were reflected in the stock's trading on November 3: it closed at $10.53, down 3.84%, then fell to $10.50 in extended trading, according to data reported by Investing.com. The move followed quarterly earnings that came in below analyst estimates, alongside a decline in the retirement solutions margin. Management's fourth-quarter outlook, which points to adjusted earnings near third-quarter levels, is the next milestone before the period when the company targets a margin recovery in the first half of 2027. The company also includes financing volume growth in 2027 among the assumptions underpinning its second-half earnings per share target. Those targets remain tied to execution of pricing adjustments and the business volume and margin path set out by management.