Zacks Investment Research downgraded MetLife Inc. (MET) to a Zacks #5 Rank (Strong Sell) on January 5.
Why the Downgrade?
Following its projection of a decline in operating earnings growth in 2013 on an annual basis, MetLife witnessed sharp downward estimate revisions. The projection was in the range of $5.5–$5.9 billion or $4.95–$5.35 per share based on average shares outstanding of about 1.11 billion. This guidance does not assume share buybacks, which is expected to be withheld in 2013.
For 2013, most of the estimates were revised downward over the last 30 days, lowering the Zacks Consensus Estimate by 4.7% to $5.23 per share. The Zacks Consensus Estimate for 2012 decreased 1% to $5.21 per share over the last 30 days as 13 out of the 19 estimates moved downward. Even the higher 2012 guidance could not constrain the fall.
MetLife raised the earnings projection for full year 2012 in the band of $5.5–$5.6 billion or $5.15–$5.25 per share from the prior estimate of $5.14–$5.57 billion or $4.80–$5.20 per share, based on average shares outstanding of about 1.074 billion.
On October 31, 2012, MetLife reported mixed third-quarter results with top line missing the Zacks Consensus Estimate, while bottom line surpassing the same.
The better-than-expected bottom line was driven by higher net investment income, as well as lower-than-expected operating expenses.
Top line collapsed on weak premiums’ growth and unfavorable foreign exchange. Also, low interest rates inflated the derivative losses.
Other Stocks to Consider
Not all multi-line insurance stocks are performing as poorly as MetLife. The following stocks with a favorable Zacks Rank are also performing well and are worth considering. Enstar Group Ltd. (ESGR) and Radian Group Inc. (RDN) are among the other stocks that carry a Zacks #1 Rank (Strong Buy).
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