Here's Why Investors Should Retain Manulife (MFC) Stock Now
Manulife Financial Corporation’s MFC strong Asia business, expanding wealth and asset management domain, solid capital position and favorable growth estimates make it worthy of retaining in one’s portfolio.
The life insurer has a decent track record of delivering earnings surprises in three of the last four quarters while missing once, the average beat being 2%.
Zacks Rank and Price Performance
Manulife currently carries a Zacks Rank #3 (Hold). In the year-to-date period, the stock has gained 4.4% compared with the industry’s growth of 6.8%.
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Return on Equity
Manulife’s return on equity (ROE) for the trailing 12 months is 13.5%, better than the industry’s average of 13%. This reflects Manulife’s efficiency in utilizing shareholders’ funds. The company targets 15% ROE over the medium term.
Business Tailwinds
Manulife, a leading life insurer in Canada, continually grows its Asia business, contributing significantly to its core earnings. The life insurer remains focused on accelerating growth in the highest potential businesses and targets three-fourth of core earnings from these businesses by 2025.
MFC’s Asia business is expected to benefit from an aging population and growth in household wealth. APE sales, new business value and new business CSM are expected to drive growth in this segment.
Manulife is consistently expanding its Wealth and Asset Management business around the world, which has been driving its core earnings growth. The company expects core EBITDA margin to be near 30% for this segment. Positive flows, consistent net income yield and the company’s acquisition of Manulife Fund Management in China should drive its margins in the future.
MFC has an impressive inorganic growth story. Strategic acquisitions, transformational digital offerings and bancassurance partnerships are expected to fuel growth in the future. Banking on its solid financial position, Manulife is well poised to ramp up its inorganic growth profile.
The Zacks Consensus Estimate for 2023 and 2024 earnings per share (EPS) is pegged at $2.44 and $2.66, indicating increases of 2.5% and 8.9% year over year, respectively. The long-term earnings growth rate is currently pegged at 10%. Manulife expects core EPS growth between 10% and 12% over the medium term.
MFC boasts a strong capital position. Its dividend has increased at a six-year CAGR of 10%. It targets dividend payout in the range of 35-45% over the medium term.
The insurer returned $2.2 billion to shareholders through share buyback and dividends in the first half of 2023. MFC targets a leverage ratio of 25% over the medium term.
Manulife has a Value Score of A.
MFC’s long-term debt has increased more than three-fold over the last five years. Moreover, the company is exposed to currency translation losses, which may impact its results. Nevertheless, we believe that a systematic and strategic plan of action will drive growth in the long term.
Stocks to Consider
Some better-ranked stocks from the insurance industry are HCI Group, Inc. HCI, Primerica, Inc. PRI and Kinsale Capital Group, Inc. KNSL.
HCI Group currently sports a Zacks Rank #1 (Strong Buy). HCI’s earnings surpassed the Zacks Consensus Estimate in each of the last four quarters, the average beat being 448.4%. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for HCI’s 2023 and 2024 EPS indicates year-over-year increases of 159.3% and 33.9%, respectively.
Primerica presently carries a Zacks Rank #2 (Buy). PRI’s earnings surpassed the Zacks Consensus Estimate in each of the last four quarters, the average beat being 6.5%.
The Zacks Consensus Estimate for PRI’s 2023 and 2024 EPS implies year-over-year growth of 36.6% and 11.2%, respectively. Year to date, PRI shares have gained 44.2%.
Kinsale Capital currently carries a Zacks Rank #2. KNSL’s earnings surpassed the Zacks Consensus Estimate in each of the last four quarters, the average beat being 14.9%.
The Zacks Consensus Estimate for KNSL’s 2023 and 2024 EPS suggests year-over-year improvements of 48.2% and 21.8%, respectively. Year todate, KNSL’s shares have surged 54.1%.
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Manulife Financial Corp (MFC) : Free Stock Analysis Report
Primerica, Inc. (PRI) : Free Stock Analysis Report
HCI Group, Inc. (HCI) : Free Stock Analysis Report
Kinsale Capital Group, Inc. (KNSL) : Free Stock Analysis Report
