It has been about a month since the last earnings report for Manulife Financial (MFC Quick QuoteMFC - Free Report) . Shares have added about 14.6% in that time frame, outperforming the S&P 500.

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

Manulife Q3 Earnings Flat Y/Y, Asia Business Solid

Manulife Financial delivered third-quarter 2020 core earnings of $1.1 billion (C$1.5 billion), flat with the prior-year quarter.

This result can be attributed to core earnings growth in Asia and U.S. division. However, the same was partially offset by lower international universal life sales, decline in interest rates and adverse impacts of COVID-19.

New business value (NBV) in the reported quarter was $345 million (C$460 million), down 13.3% year over year due to lower APE sales and a decline in interest rates in Hong Kong, and lower international universal life sales due to COVID-19 in U.S. segments.

Annualized premium equivalent (APE) sales decreased 9% year over year to $1 billion (C$1.4 billion), attributable to lower sales in Asia, Hong Kong and U.S. segments.

Expense efficiency ratio improved 20 basis points (bps) to 51.2%.

As of Sep 30, 2020, Manulife Financial’s financial leverage ratio deteriorated 60 bps year over year to 26.7%.

Wealth and asset management assets under management and administration were $715.4 billion, up 8.5% year over year. Wealth and Asset Management business generated net outflow of $1.6 billion (C$2.2 billion), driven by higher retail redemptions in mainland China, the non-recurrence of an $8.5 billion redemption in Institutional Asset Management, and higher member withdrawals in Retirement.

Core return on equity, measuring the company’s profitability, contracted 160 bps year over year to 11.4%.

Life Insurance Capital Adequacy Test (LICAT) ratio was 155% as of Sep 30, 2019, up from 146% as of Sep 30, 2019.

Segmental Performance

Global Wealth and Asset Management division’s core earnings came in at $231 million (C$308 million).

Asia division’s core earnings totaled $419.5 million (C$559 million), up 6.5% year over year.  NBV decreased 16%, primarily due to lower APE sales and a decline in interest rates in Hong Kong. APE sales decreased 6% as growth in Japan and Asia Other was more than offset by lower sales in Hong Kong.

Manulife Financial’s Canada division core earnings of $209.3 million (C$279 million) were down 13.1% year over year. NBV grew 31% year over year primarily due to higher sales volumes in large-case group insurance. APE sales increased 23%, driven by higher large-case group insurance sales, partially offset by lower individual insurance sales due to the adverse impact of COVID-19.

The U.S. division reported core earnings of $373.7 million (C$498 million), up 4.8% year over year. NBV dropped 38%, primarily due to lower international universal life sales due to COVID-19. APE sales decreased 14% mainly due to the adverse impacts of COVID-19.

How Have Estimates Been Moving Since Then?

It turns out, estimates revision have trended upward during the past month.

VGM Scores

Currently, Manulife has a subpar Growth Score of D, however its Momentum Score is doing a bit better with a C. 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 C. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Manulife has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.