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Manulife (MFC) Shares Rally 19% YTD: More Room for Growth?
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Manulife Financial Corporation (MFC - Free Report) shares have rallied 18.5% year to date, outperforming the industry’s increase of 9.6%, the Finance sector’s increase of 3.9% and the S&P 500 composite’s rise of 11.5%. With a market capitalization of $47.2 billion, the average volume of shares traded in the last three months was 3.1 million.
The strength of its Asia business, expanding Wealth and Asset Management business and solid capital position continue to drive this Zacks Rank #3 (Hold) life insurer. MFC delivered an earnings surprise in each of the last six quarters.
Manulife’s return on equity (ROE) for the trailing 12 months is 16.3%, better than the industry average of 15.5%. This reflects Manulife’s efficiency in utilizing shareholders’ funds. It targets 13% ROE over the medium term.
The Zacks Consensus Estimate for 2024 and 2025 earnings per share (EPS) is pegged at $2.74 and $2.96, respectively, suggesting an increase of 6.6% and 8% year over year.
While earnings have grown 4.9% over the last five years, the long-term earnings growth rate is currently pegged at 10%. Manulife targets core EPS growth between 10% and 12% over the medium term.
Manulife is continuously growing its Asia business, which contributes majorly to the company’s earnings and plays a crucial part in its long-term growth. This insurer targets to make the Asia business account for half of the company’s core earnings by 2025. We believe MFC, one of the three dominant life insurers within the domestic Canadian market, is well-poised to capitalize on the growing opportunities in the Asia market by banking on its strategic initiatives.
Manulife is expanding its Wealth and Asset Management business and has identified Europe and the wider EMEA market as a significant growth area. It is thus continually making long-term investments in this region.
MFC has been accelerating growth in the highest potential businesses and targets two-thirds of core earnings from these businesses. Its inorganic growth is impressive as this life insurer prudently deploys capital in high-growth, less capital-intensive and higher-return businesses.
In tandem with the industry trend, Manulife is continually building on its digital platform as well as accelerating the adoption of new technologies such as generative AI.
Consistent cash flow leads to a sturdy capital position that helps MFC distribute wealth to investors by hiking dividends. The insurer has increased its dividend at a seven-year CAGR of 10% and targets a 35-45% dividend payout over the medium term.
Manulife has been strengthening its balance sheet by improving liquidity and leverage and thus targets a leverage ratio of 25%. Notably, its free cash flow conversion has remained more than 100% over the last many quarters, reflecting its solid earnings.
Stocks to Consider
Some top-ranked stocks from the insurance space are Reinsurance Group of America (RGA - Free Report) , Old Republic International (ORI - Free Report) and Radian Group (RDN - Free Report) .
Reinsurance Group delivered a four-quarter average earnings surprise of 19.48%. The stock has gained 29.4% year to date. The Zacks Consensus Estimate for RGA’s 2024 and 2025 earnings implies a 3.9% and 4.3% year-over-year increase, respectively. It sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Old Republic delivered a four-quarter average earnings surprise of 6.61%. The stock has gained 7.2% year to date. The Zacks Consensus Estimate for ORI’s 2024 and 2025 earnings suggests growth of 3.8% and 4.8%, respectively, from a year ago. It carries a Zacks Rank #2 (Buy).
Radian delivered a four-quarter average earnings surprise of 22.79%. The stock has gained 9.7% year to date. The Zacks Consensus Estimate for RDN’s 2024 earnings has moved 7.6% north in the past 30 days. It carries a Zacks Rank #2.
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Manulife (MFC) Shares Rally 19% YTD: More Room for Growth?
Manulife Financial Corporation (MFC - Free Report) shares have rallied 18.5% year to date, outperforming the industry’s increase of 9.6%, the Finance sector’s increase of 3.9% and the S&P 500 composite’s rise of 11.5%. With a market capitalization of $47.2 billion, the average volume of shares traded in the last three months was 3.1 million.
The strength of its Asia business, expanding Wealth and Asset Management business and solid capital position continue to drive this Zacks Rank #3 (Hold) life insurer. MFC delivered an earnings surprise in each of the last six quarters.
Manulife’s return on equity (ROE) for the trailing 12 months is 16.3%, better than the industry average of 15.5%. This reflects Manulife’s efficiency in utilizing shareholders’ funds. It targets 13% ROE over the medium term.
It has a VGM Score of A.
Image Source: Zacks Investment Research
Growth Drivers
The Zacks Consensus Estimate for 2024 and 2025 earnings per share (EPS) is pegged at $2.74 and $2.96, respectively, suggesting an increase of 6.6% and 8% year over year.
While earnings have grown 4.9% over the last five years, the long-term earnings growth rate is currently pegged at 10%. Manulife targets core EPS growth between 10% and 12% over the medium term.
Manulife is continuously growing its Asia business, which contributes majorly to the company’s earnings and plays a crucial part in its long-term growth. This insurer targets to make the Asia business account for half of the company’s core earnings by 2025. We believe MFC, one of the three dominant life insurers within the domestic Canadian market, is well-poised to capitalize on the growing opportunities in the Asia market by banking on its strategic initiatives.
Manulife is expanding its Wealth and Asset Management business and has identified Europe and the wider EMEA market as a significant growth area. It is thus continually making long-term investments in this region.
MFC has been accelerating growth in the highest potential businesses and targets two-thirds of core earnings from these businesses. Its inorganic growth is impressive as this life insurer prudently deploys capital in high-growth, less capital-intensive and higher-return businesses.
In tandem with the industry trend, Manulife is continually building on its digital platform as well as accelerating the adoption of new technologies such as generative AI.
Consistent cash flow leads to a sturdy capital position that helps MFC distribute wealth to investors by hiking dividends. The insurer has increased its dividend at a seven-year CAGR of 10% and targets a 35-45% dividend payout over the medium term.
Manulife has been strengthening its balance sheet by improving liquidity and leverage and thus targets a leverage ratio of 25%. Notably, its free cash flow conversion has remained more than 100% over the last many quarters, reflecting its solid earnings.
Stocks to Consider
Some top-ranked stocks from the insurance space are Reinsurance Group of America (RGA - Free Report) , Old Republic International (ORI - Free Report) and Radian Group (RDN - Free Report) .
Reinsurance Group delivered a four-quarter average earnings surprise of 19.48%. The stock has gained 29.4% year to date. The Zacks Consensus Estimate for RGA’s 2024 and 2025 earnings implies a 3.9% and 4.3% year-over-year increase, respectively. It sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Old Republic delivered a four-quarter average earnings surprise of 6.61%. The stock has gained 7.2% year to date. The Zacks Consensus Estimate for ORI’s 2024 and 2025 earnings suggests growth of 3.8% and 4.8%, respectively, from a year ago. It carries a Zacks Rank #2 (Buy).
Radian delivered a four-quarter average earnings surprise of 22.79%. The stock has gained 9.7% year to date. The Zacks Consensus Estimate for RDN’s 2024 earnings has moved 7.6% north in the past 30 days. It carries a Zacks Rank #2.