We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Manulife (MFC) Stock Rises 19% YTD: Will the Rally Last?
Read MoreHide Full Article
Shares of Manulife Financial Corporation (MFC - Free Report) have rallied 19% year to date, outperforming the industry’s increase of 12.3%, the Finance sector’s increase of 12.1% and the S&P 500 composite’s rise of 17.6%.
A strong performing Asia business, expanding Wealth and Asset Management business and a solid capital position drive this Zacks Rank #3 (Hold) insurer.
The company is one of the three dominant life insurers within its domestic Canadian market and possesses rapidly growing operations in the United States and several Asian countries. It has a decent history of delivering surprises for the last seven quarters. It has a VGM Score of B.
Manulife’s return on equity (ROE) for the trailing 12 months is 16.2%, better than the industry average of 15.5%. This reflects Manulife’s efficiency in utilizing shareholders’ funds. It expects to generate a ROE of 18% by 2027.
Image Source: Zacks Investment Research
Can MFC Retain the Momentum?
Manulife's Asia business continues to be a major contributor to earnings. MFC now expects core earnings from Asia to contribute 50% to overall earnings by 2027. Asia has been the fastest-growing insurance segment, supported by strong volume growth and attractive margins. This market appears attractive, given its changing demographics.
As a part of its strategic priorities, Manulife is also investing in high ROE and growth segments in North America. It has also identified Europe (and the wider EMEA market) as a significant growth area, and thus, Manulife Asset Management is making long-term investments in the region.
The company’s highest potential businesses, including operations in Asia, Global WAM, Canada group benefits and behavioral insurance products, currently contribute two-thirds to core earnings. The insurer now looks to increase it to 75% and thus is expediting growth in these highest potential businesses.
MFC is digitalizing and automating workflows through GenAI and advanced analytics. Accelerated digitalization should help it achieve an expense efficiency ratio of less than 45% in the medium term.
Manulife has been strengthening its balance sheet by improving liquidity and leverage. It 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.
The life insurer, banking on consistent cash flow, hiked dividends at a six-year CAGR of 10% and targets a 35-45% dividend payout over the medium term.
The Zacks Consensus Estimate for 2024 and 2025 earnings per share (EPS) is pegged at $2.72 and $2.86, respectively, suggesting an increase of 5.8% and 5.2% year over year. The long-term earnings growth rate is currently pegged at 10%. Manulife expects core EPS growth of 10-12% over the medium term.
Brighthouse Financial’s earnings surpassed estimates in three of the last four quarters and missed in one, the average earnings surprise being 3.76%.
Year to date, BHF’s stock has lost 17.7%. The Zacks Consensus Estimate for BHF’s 2024 and 2025 earnings indicates 27.7% and 11% year-over-year growth, respectively.
Reinsurance Group delivered a four-quarter average earnings surprise of 20.5%. The stock has gained 29% year to date.
The Zacks Consensus Estimate for RGA’s 2024 and 2025 earnings implies 8.2% and 3.8% year-over-year increase, respectively.
Primerica earnings surpassed estimates in two of the last four quarters and missed in the other two, the average surprise being 1.74%.
Year to date, PRI’s stock has lost 26.9%. The Zacks Consensus Estimate for PRI’s 2024 and 2025 earnings implies 11.5% and 11.4% year-over-year growth, respectively.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Manulife (MFC) Stock Rises 19% YTD: Will the Rally Last?
Shares of Manulife Financial Corporation (MFC - Free Report) have rallied 19% year to date, outperforming the industry’s increase of 12.3%, the Finance sector’s increase of 12.1% and the S&P 500 composite’s rise of 17.6%.
A strong performing Asia business, expanding Wealth and Asset Management business and a solid capital position drive this Zacks Rank #3 (Hold) insurer.
The company is one of the three dominant life insurers within its domestic Canadian market and possesses rapidly growing operations in the United States and several Asian countries. It has a decent history of delivering surprises for the last seven quarters. It has a VGM Score of B.
Manulife’s return on equity (ROE) for the trailing 12 months is 16.2%, better than the industry average of 15.5%. This reflects Manulife’s efficiency in utilizing shareholders’ funds. It expects to generate a ROE of 18% by 2027.
Image Source: Zacks Investment Research
Can MFC Retain the Momentum?
Manulife's Asia business continues to be a major contributor to earnings. MFC now expects core earnings from Asia to contribute 50% to overall earnings by 2027. Asia has been the fastest-growing insurance segment, supported by strong volume growth and attractive margins. This market appears attractive, given its changing demographics.
As a part of its strategic priorities, Manulife is also investing in high ROE and growth segments in North America. It has also identified Europe (and the wider EMEA market) as a significant growth area, and thus, Manulife Asset Management is making long-term investments in the region.
The company’s highest potential businesses, including operations in Asia, Global WAM, Canada group benefits and behavioral insurance products, currently contribute two-thirds to core earnings. The insurer now looks to increase it to 75% and thus is expediting growth in these highest potential businesses.
MFC is digitalizing and automating workflows through GenAI and advanced analytics. Accelerated digitalization should help it achieve an expense efficiency ratio of less than 45% in the medium term.
Manulife has been strengthening its balance sheet by improving liquidity and leverage. It 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.
The life insurer, banking on consistent cash flow, hiked dividends at a six-year CAGR of 10% and targets a 35-45% dividend payout over the medium term.
The Zacks Consensus Estimate for 2024 and 2025 earnings per share (EPS) is pegged at $2.72 and $2.86, respectively, suggesting an increase of 5.8% and 5.2% year over year. The long-term earnings growth rate is currently pegged at 10%. Manulife expects core EPS growth of 10-12% over the medium term.
Stocks to Consider
Some top-ranked stocks from the life insurance space are Brighthouse Financial (BHF - Free Report) , Reinsurance Group of America, Incorporated (RGA - Free Report) and Primerica (PRI - Free Report) . Each stock presently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Brighthouse Financial’s earnings surpassed estimates in three of the last four quarters and missed in one, the average earnings surprise being 3.76%.
Year to date, BHF’s stock has lost 17.7%. The Zacks Consensus Estimate for BHF’s 2024 and 2025 earnings indicates 27.7% and 11% year-over-year growth, respectively.
Reinsurance Group delivered a four-quarter average earnings surprise of 20.5%. The stock has gained 29% year to date.
The Zacks Consensus Estimate for RGA’s 2024 and 2025 earnings implies 8.2% and 3.8% year-over-year increase, respectively.
Primerica earnings surpassed estimates in two of the last four quarters and missed in the other two, the average surprise being 1.74%.
Year to date, PRI’s stock has lost 26.9%. The Zacks Consensus Estimate for PRI’s 2024 and 2025 earnings implies 11.5% and 11.4% year-over-year growth, respectively.