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Will Lower Premiums Hurt MetLife's (MET) Q3 Earnings?

MetLife, Inc. MET is set to report its third-quarter 2023 results on Nov 11, after the closing bell.

What Do the Estimates Say?

The Zacks Consensus Estimate for third-quarter earnings per share (EPS) of $1.99 has declined 3 cents in the past week. The estimated figure suggests an increase of 64.5% from the prior-year reported number. Also, the consensus estimate for third-quarter revenues of $17.9 billion indicates a 24.3% fall from the year-ago reported figure.

MetLife’s earnings beat the consensus estimate in two of the past four quarters and missed twice. This is depicted in the graph below:

MetLife, Inc. Price and EPS Surprise

MetLife, Inc. Price and EPS Surprise
MetLife, Inc. Price and EPS Surprise

MetLife, Inc. price-eps-surprise | MetLife, Inc. Quote

Before we get into what to expect for the to-be-reported quarter in detail, it’s worth taking a look at MET’s previous-quarter performance first.

Q2 Earnings Rewind

In the last reported quarter, the leading insurance-based global financial services company reported adjusted operating EPS of $1.94, which beat the Zacks Consensus Estimate by 4.9% on the back of higher investment returns, volume growth across some segments and improved contributions from the U.S. and EMEA businesses. The positives were partially offset by rising expenses and reduced profit levels from MetLife Holdings, Latin America and Asia businesses.

Now let’s see how things have shaped up prior to the third-quarter earnings announcement.

Q3 Factors to Note

Reduced premiums and weaker performance in the EMEA segment are likely to have affected MetLife’s third-quarter results. Our estimate for premiums for the quarter under review suggests a fall of 36.2% from the prior-year quarter.

Also, our model indicates that Universal Life and Investment-Type Product Policy Fees for the third quarter are expected to witness a 1.6% year-over-year decrease. The above-mentioned factors are likely to have led to a year-over-year decline in profits, making an earnings beat uncertain.

However, the company is expected to have witnessed improving profits from Retirement & Income Solutions and MetLife Holdings businesses in the third quarter. While we expect adjusted pre-tax income from the Retirement & Income Solutions business to have grown almost 44% year over year, the same from MetLife Holdings is likely to have risen more than 165%.

Our estimate for adjusted pre-tax income in Asia indicates a nearly 62.2% growth from the prior-year period. Our estimate for net investment income indicates a 29% year-over-year increase from the year-ago period. We expect MET’s U.S. Group Benefits’ adjusted revenues to increase 2.4% from the prior-year quarter’s reading. Our estimate for adjusted revenues in Latin America indicates a jump of 13.7% from the year-ago period’s actuals. These are expected to have partially offset the negatives in the quarter under review.

Earnings Whispers

Our proven model does not conclusively predict an earnings beat for MetLife this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. That is not the case here, as you will see below.

Earnings ESP: The company has an Earnings ESP of -0.51%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: MetLife currently carries a Zacks Rank #3.

Stocks to Consider

While an earnings beat looks uncertain for MetLife, here are some companies in the broader Finance space that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this time around:

American International Group, Inc. AIG has an Earnings ESP of +4.02% and a Zacks Rank of 2 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for AIG’s third-quarter 2023 EPS is pegged at $1.55, which has more than doubled from the prior-year quarter’s reported figure.

American International’s earnings beat estimates in each of the trailing four quarters, the average surprise being 13.5%.

Enact Holdings, Inc. ACT has an Earnings ESP of +2.33% and a Zacks Rank of 2 at present. The Zacks Consensus Estimate for ACT’s third-quarter 2023 EPS is pegged at $0.86, which indicates a fall of 26.5% from the prior-year quarter’s reported figure.

Enact Holdings’ earnings beat estimates in three of the trailing four quarters, missed once, the average surprise being 25%.

American Equity Investment Life Holding Company AEL currently has an Earnings ESP of +1.44% and a Zacks Rank of 3.

The Zacks Consensus Estimate for AEL’s third-quarter 2023 EPS is pegged at $1.67, suggesting a 68.7% surge from the prior-year quarter’s reported number.

American Equity's earnings beat estimates in two of the trailing four quarters and missed twice, the average surprise being 6.5%.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

American International Group, Inc. (AIG) : Free Stock Analysis Report

MetLife, Inc. (MET) : Free Stock Analysis Report

American Equity Investment Life Holding Company (AEL) : Free Stock Analysis Report

Enact Holdings, Inc. (ACT) : Free Stock Analysis Report

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