A month has gone by since the last earnings report for MetLife (MET Quick QuoteMET - Free Report) . Shares have added about 16% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is MetLife due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.

MetLife Earnings and Revenues Beat Estimates in Q3

MetLife, Inc.’s third-quarter 2020 adjusted operating earnings of $1.73 per share outpaced the Zacks Consensus Estimate by 4.9%. The bottom line also improved 36% year over year.

The company’s results benefited from strong underwriting results, rebounding of variable investment income and stringent cost-control initiatives, partly offset by decline in revenues.

Behind the Headlines

The company’s adjusted operating revenues of $16.5 billion were down 2% year over year. However, the top line surpassed the Zacks Consensus Estimate by 3.7%.

Adjusted premiums, fees and other revenues excluding pension risk transfer (PRT) inched up 2% year over year to $11.3 billion.
Net investment income (adjusted) of $4.7 billion improved 5% year over year attributable to increased private equity returns.

Total expenses of $15.1 billion were down 5% year over year, due to lower policyholder benefits and claims, interest credited to policyholder account balances, policyholder dividends and other expenses.

Adjusted expense ratio, excluding total notable items related to other expenses and PRT, came in at 18.8%, reflecting an improvement of 110 basis points (bps) year over year.

Adjusted book value per share was $53.10, which grew 9% year over year.
Adjusted return on equity was 13.2%, up 250 bps year over year.

Quarterly Segment Details

United States

Adjusted earnings in this segment improved 27% year over year to $900 million driven by volume growth and higher variable investment income.

Adjusted premiums, fees and other revenues were $6.8 billion, down 8% year over year due to weak contributions from Property & Casualty and Retirement and Income Solution sub-segments.

Asia

Adjusted earnings of $465 million climbed 33% year over year courtesy of volume growth, higher variable investment income, strong underwriting results and sound expense margins.

Adjusted premiums, fees & other revenues were $2.3 billion, which improved 8% year over year.

Latin America

Adjusted earnings of $39 million plunged 75% year over year to $39 million, due to weaker underwriting results stemming from the COVID-19 pandemic.

Adjusted premiums, fees & other revenues were $761 million, down 21% due to softer single-premium income annuity sales in Chile.

EMEA

Adjusted earnings from EMEA slid 2% year over year to $52 million. Nonetheless, adjusted earnings on a constant currency basis inched up 2% year over year attributable to volume growth, and sound underwriting results and expense margins.

Adjusted premiums, fees & other revenues of $680 million improved 4% year over year to $680 million.

MetLife Holdings

Adjusted earnings from MetLife Holdings totaled $253 million, which soared 70% year over year, courtesy of improved variable investment income and sound long-term care underwriting.
Adjusted premiums, fees & other revenues were $1.2 billion, down 4% year over year.

Corporate & Other

The segment’s adjusted loss of $131 million in the third quarter was narrower than the adjusted loss of $223 million in the prior-year quarter.

Financial Update

As of Sep 30, 2020, shareholders’ equity was $73.3 billion, which increased 10.8% from the level at 2019 end.

Long-term debt as of the third-quarter end was $14.5 billion, which increased 8% from the level at 2019 end.

Cash and cash equivalents of $24.4 billion as of Sep 30, 2020 were up 47% from the level at 2019 end.

Share Repurchase Update

The company had halted share repurchases in first-quarter 2020 amid the market volatilities induced by the COVID-19 pandemic. Nonetheless, the company has announced recommencement of share buybacks in the third quarter


 

How Have Estimates Been Moving Since Then?

It turns out, fresh estimates flatlined during the past month.

VGM Scores

At this time, MetLife has a subpar Growth Score of D, a grade with the same score on the momentum front. However, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

MetLife has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.