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MetLife Hits New 52-Week High: What's Driving the Rally?

Sapna Bagaria

On Jan 2, MetLife, Inc. MET hit a 52-week high of $51.69 per share, closing the session marginally lower at $51.62. The stock’s rally can be attributed to investors’ optimism over the company’s strong operating performance and the recent deals.

In the past year, the stock gained 26.3%, compared with its industry’s growth of 18.6%.

 

What’s Behind the Rally?

Last month, MetLife announced its plan to acquire PetFirst, a company providing insurance coverage for pets. The deal, which is to be sealed in the first quarter of 2020, will provide MetLife an instant access to the underpenetrated and rapidly growing pet insurance market. This deal is in line with the company’s philosophy of building capital-light business and effective deployment of capital.

Prior to this, in November 2018, the company entered into a pact with Bequest, INC (d/b/a Willing), a leading digital estate planning service, to acquire Willing. The deal will position MetLife as an industry leader in offering customers with estate planning services. The deal will also broaden its Protection business.

Investors are impressed with the company’s broad suite of products across various geographies.  MetLife also reduced its risk profile by divesting capital intensive high-risk businesses.

The company’s Group Benefits business is performing strongly owing to premium growth across its core product lines. Continuous pension risk transfer transactions within its Retirement and Income Solutions segment are also impressive.

The company’s strong balance sheet and investment grade financial strength rating makes it a favorite among investors.

Given the favorable dynamics, the company is poised to perform well going forward. At the current forward 12-month price-to-earnings ratio of 9.33, the shares of the company are valued almost in line with its industry P/E of 9.68, below its three-year high of 12. However, shares are valued above the median of 8.69X.

MetLife carries a Zacks Rank #2 (Buy) and has an impressive Value Score of A. Our research shows that stocks with a Value Style Score of A or B when combined with a Zacks Rank #1 (Strong Buy) or 2 offer the best opportunities in the value investing space.

Some other top-ranked stocks in the insurance space are RenaissanceRe Holdings RNR, Hallmark Financial Services, Inc. HALL and MGIC Investment Corp. MTG. Each of these stocks carries a Zacks Rank #2 (Buy).

You can see the complete list of today’s Zacks #1 Rank stocks here.

RenaissanceRe Holdings surpassed earnings estimates in three of the trailing four quarters, the surprise being 23.3%, on average.

MGIC Investment and Hallmark Financial Services beat their respective earnings estimates in each of the trailing four quarters, the surprise being 12.6% and 95.3%, on average, respectively.

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