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Manulife (MFC) Up 1.4% Since Last Earnings Report: Can It Continue?
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It has been about a month since the last earnings report for Manulife Financial (MFC - Free Report) . Shares have added about 1.4% 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 the most recent earnings report in order to get a better handle on the important drivers.
Manulife Q2 Earnings Rise Y/Y on Solid Asia Business
Manulife Financial delivered second-quarter 2019 core earnings of $1.1 billion (C$1.5 billion), up 1.5% year over year. This upside can be attributed to double-digit core earnings growth in Asia and higher investment income in surplus portfolio. However, non-recurrence of both a tax-related benefit and notably positive group insurance policyholder experience in Canada as well as the impact of actions to improve the capital efficiency of legacy businesses was a partial offset.
New business value (NBV) in the reported quarter was $358 million (C$479 million), up 16.5% year over year on the back of growth in Asia and Canada insurance segments.
Annualized premium equivalent (APE) sales increased 9.2% year over year to $1 billion (C$1.4 billion) driven by higher sales in Canada and U.S. segments.
Expense efficiency ratio improved 130 basis points (bps) to 52.5%.
As of Jun 30, 2019, Manulife Financial’s financial leverage ratio improved 300 bps year over year to 26.4%.
Wealth and asset management assets under management and administration were $498.7 billion (C$653.1 billion), up 2.1% year over year.
Core return on equity, measuring the company’s profitability, contracted 130 bps year over year to 12.7%.
The Office of the Superintendent of Financial Institutions' new Life Insurance Capital Adequacy Test (LICAT) regulatory capital regime came into effect in Canada on Jan 1, 2018, replacing the Minimum Continuing Capital and Surplus framework. LICAT ratio was 144% as of Jun 30, 2019, up from 143% as of Dec 31, 2018.
Segmental Performance
Global Wealth and Asset Management division’s core earnings came in at $180.9 million (C$242 million), up 1.3% year over year.
Asia division’s core earnings totaled $352 million (C$471 million), up 14.4% year over year. NBV increased 7% driven by favorable business mix, partially offset by lower sales in Japan. Annualized premium equivalents sales decreased 2% year over year as growth in Hong Kong and Asia Other was more than offset by lower sales in Japan.
Manulife Financial’s Canada division core earnings of $233.2 million (C$312 million) were down 21% year over year. NBV remained flat year over year as higher insurance sales were offset by business mix changes in group insurance and the withdrawal of certain capital-intensive annuity products. APE sales increased 46% due to a large-case group insurance sale and growth across individual insurance business including living benefits, term and permanent life insurance product lines.
The U.S. division reported core earnings of $329.6 million (C$441 million), up 0.2% year over year. NBV nearly quadrupled primarily as a result of recent actions to improve margins as well as a more favorable product mix. APE sales increased 16% on higher universal life and international sales.
Dividend Update
The board of directors declared a dividend of 25 cents per share to be paid out on Sep 19 to shareholders of record at the close of business on Aug 20.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended downward during the past month.
VGM Scores
At this time, 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 B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions has been net zero. Notably, Manulife has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Manulife (MFC) Up 1.4% Since Last Earnings Report: Can It Continue?
It has been about a month since the last earnings report for Manulife Financial (MFC - Free Report) . Shares have added about 1.4% 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 the most recent earnings report in order to get a better handle on the important drivers.
Manulife Q2 Earnings Rise Y/Y on Solid Asia Business
Manulife Financial delivered second-quarter 2019 core earnings of $1.1 billion (C$1.5 billion), up 1.5% year over year. This upside can be attributed to double-digit core earnings growth in Asia and higher investment income in surplus portfolio. However, non-recurrence of both a tax-related benefit and notably positive group insurance policyholder experience in Canada as well as the impact of actions to improve the capital efficiency of legacy businesses was a partial offset.
New business value (NBV) in the reported quarter was $358 million (C$479 million), up 16.5% year over year on the back of growth in Asia and Canada insurance segments.
Annualized premium equivalent (APE) sales increased 9.2% year over year to $1 billion (C$1.4 billion) driven by higher sales in Canada and U.S. segments.
Expense efficiency ratio improved 130 basis points (bps) to 52.5%.
As of Jun 30, 2019, Manulife Financial’s financial leverage ratio improved 300 bps year over year to 26.4%.
Wealth and asset management assets under management and administration were $498.7 billion (C$653.1 billion), up 2.1% year over year.
Core return on equity, measuring the company’s profitability, contracted 130 bps year over year to 12.7%.
The Office of the Superintendent of Financial Institutions' new Life Insurance Capital Adequacy Test (LICAT) regulatory capital regime came into effect in Canada on Jan 1, 2018, replacing the Minimum Continuing Capital and Surplus framework. LICAT ratio was 144% as of Jun 30, 2019, up from 143% as of Dec 31, 2018.
Segmental Performance
Global Wealth and Asset Management division’s core earnings came in at $180.9 million (C$242 million), up 1.3% year over year.
Asia division’s core earnings totaled $352 million (C$471 million), up 14.4% year over year. NBV increased 7% driven by favorable business mix, partially offset by lower sales in Japan. Annualized premium equivalents sales decreased 2% year over year as growth in Hong Kong and Asia Other was more than offset by lower sales in Japan.
Manulife Financial’s Canada division core earnings of $233.2 million (C$312 million) were down 21% year over year. NBV remained flat year over year as higher insurance sales were offset by business mix changes in group insurance and the withdrawal of certain capital-intensive annuity products. APE sales increased 46% due to a large-case group insurance sale and growth across individual insurance business including living benefits, term and permanent life insurance product lines.
The U.S. division reported core earnings of $329.6 million (C$441 million), up 0.2% year over year. NBV nearly quadrupled primarily as a result of recent actions to improve margins as well as a more favorable product mix. APE sales increased 16% on higher universal life and international sales.
Dividend Update
The board of directors declared a dividend of 25 cents per share to be paid out on Sep 19 to shareholders of record at the close of business on Aug 20.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended downward during the past month.
VGM Scores
At this time, 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 B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions has been net zero. Notably, Manulife has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.