Manulife Financial Corporation MFC is poised for long-term growth on the back of strong Asian business, expansion of its wealth and asset management business, and solid capital position. The company has a favorable Growth Score of B. This style score analyzes the company’s growth prospects. Its expected long-term earnings growth rate is 10%, better than the industry’s average of 9%.
Manulife’s return on equity of 13.5% betters the industry average of 9.4%. Return on equity is a profitability measure, identifying the company’s efficiency in utilizing its shareholders’ funds.
The Zacks Consensus Estimate for 2019 earnings has moved up 0.5% and increased 2.6% for 2020 over the past 30 days, reflecting analyst confidence in the stock.
Manulife Financial’s Asia business contributes significantly to its earnings. The company continues to aggressively develop its business in Asia. An expanded distribution network across the region and strategically important distribution agreements with key partners in Japan and Indonesia should continue to drive results.
The company has been consistently growing its wealth and asset management business. It already has a solid presence in North America and Asia and has identified Europe as a significant growth area. The company had more than $1 trillion in global assets under management and administration at 2018 end.
Manulife is one of the three dominant life insurers in its domestic Canadian market and is rapidly growing operations in the United States and several Asian countries. The company carries an impressive VGM Score of B. Back-tested results show that stocks with a favorable Value Score of A or B coupled with a solid Zacks Rank #1 (Strong Buy) and 2 (Buy) offer the best investment opportunity.
Its valuation looks attractive at the current level as the price-to-book multiple of 1 is lower than the industry average of 3.2. The company has an impressive Value Score of B. Value Score helps to find undervalued stocks.
Shares of this Zacks Rank #2 life insurer have gained 18.1% year to date, outperforming the industry’s 15.7% increase and Zacks S&P 500 composite’s rise of 11.8%.
A robust balance sheet along with solid operational performance and outlook for growth in the future has enabled the company to hike its dividend payout. The 14% dividend hike on Nov 1, 2018 marked the sixth increase in three years. Its dividend yield of 4.6% betters the industry average of 2.4%, making it an attractive pick for yield-seeking investors.
The Zacks Consensus Estimate for 2019 earnings and revenues indicates year-over-year improvement of 3.8% and 24.3%, respectively. Earnings and revenues in 2020 are estimated to record year-over-year increase of 7% and 2.7%, respectively.
Other Stocks to Consider
Some other top-ranked stocks from the insurance industry are Health Insurance Innovations, Inc. HIIQ, Voya Financial, Inc. VOYA and Torchmark Corp. TMK.
Health Insurance Innovations is an operator of cloud-based technology platform and distributor of individual and family health insurance plans, and supplemental products in the United States. The stock sports a Zacks Rank #1. The company pulled off four-quarter average positive surprise of 9.02%. You can see the complete list of today’s Zacks #1 Rank stocks here.
Voya Financial is an operator of retirement, investment, and employee benefits in the United States. The company pulled off a four-quarter average positive surprise of 4.01%. The company carries a Zacks Rank #2.
Torchmark provides various life and health insurance products, and annuities in the United States, Canada and New Zealand. The company pulled off four-quarter average positive surprise of 2%. The company holds a Zacks Rank #2.
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