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Can MetLife (MET) Maintain Its Earnings Beat Streak in Q3?

Sapna Bagaria

MetLife, Inc. MET is set to release its third-quarter 2019 earnings on Oct 30.

The Zacks Consensus Estimate for the company’s earnings per share is pegged at $1.41, indicating an increase of 2.17% year over year. The consensus mark for revenues is pegged at $16.4 billion, indicating a decline of 0.2%.

Factors in Play

Within the U.S. business segment, Group Benefits business is likely to have aided the bottom line in the third quarter, driven by volume growth and expense margin. This business is also expected to have witnessed increase in sales of voluntary products. The company’s brand name, product sets, customer base and distribution reach might have driven sales of voluntary products. Per the Zacks Consensus Estimate, premium in the Group Benefits business is pegged at $4.2 billion, indicating 4.5% increase from the year-ago quarter reported figure.

Favorable underwriting, variable investment income and solid volume growth are likely to have benefited operating earnings in Retirement and Income Solutions segment in the quarter under review. This increase might have been partially offset by weaker investment margin. Per the Zacks Consensus Estimate, premium in the Retirement and Income Solutions subsegment is pegged at $1.3 billion, indicating a decline of 15% from the year-ago quarter reported figure.

The company’s Asia business is likely to have witnessed the negative impact of a strong U.S. dollar in the quarter under review, which might have been offset by strong volume growth. Competition in the Japanese foreign currency denominated product market is likely to have impacted foreign exchange sales.

The segment is likely to have seen higher accident and health sales in Japan, as well as continued strong sales in China. Per the Zacks Consensus Estimate, premium in the Asia business is pegged at $1.6 billion, indicating a decline of 3% from the year-ago quarter reported figure.

The company’s Latin America business is likely to have witnessed an increase in adjusted earnings year over year due to strong Chilean encaje returns and good volume growth. Per the Zacks Consensus Estimate, premium in the Latin America business is pegged at $671 million, indicating a decline of 3% from the year-ago quarter reported figure.

In the EMEA business, strong sales are likely to have impacted group business in the U.K. and credit life in Turkey. Per the Zacks Consensus Estimate, premium in the EMEA business is pegged at $550 million, indicating an increase of 7% from the year-ago quarter reported figure.

Net investment income is likely to have suffered from the impact of falling interest rates on recurring investment margins and the strengthening of the U.S. dollar during the third quarter. Per the Zacks Consensus Estimate, net investment income is pegged at $4.3 billion, indicating a decline of 3.3% from the year-ago quarter reported figure.

Share repurchases made by MetLife in the to-be-reported quarter is likely to have benefited its bottom line.

Earnings Surprise History

The company boasts an attractive earnings surprise history. It beat estimates in each of the last four quarters with an average positive surprise of 8.36%. This is depicted in the chart below:

MetLife, Inc. Price and EPS Surprise

MetLife, Inc. Price and EPS Surprise

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

 

What Our Model Says

Our proven model predicts an earnings beat for MetLife this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Earnings ESP: MetLife has an Earnings ESP of +0.28% as the Zacks Consensus Estimate is pegged at a loss of 41 cents per share and the Most Accurate Estimate stands at a loss of 39 cents.

Zacks Rank: MetLife has a Zacks Rank #3.

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

Other Stocks That Warrant a Look

Here are some other companies that you may consider as our model shows that these too have the right combination of elements to post an earnings beat this quarter:

Lincoln National Corp. LNC has an Earnings ESP of +0.65% and a Zacks Rank #3.

Brighthouse Financial Inc. BHF has an Earnings ESP of +0.56% and a Zacks Rank #3.

Voya Financial Inc. VOYA has an Earnings ESP of +0.05% and a Zacks Rank #3.

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