MetLife (MET) Rises 11.4% in 3 Months: More Room for Growth?
MetLife, Inc. MET shares have jumped 11.4% in the past three months, outperforming the industry’s 9.8% increase. Based in New York, MetLife is an insurance-based global financial services company. Volume growth and solid performances of the Group Benefits and RIS businesses are aiding the company. MET has a market cap of $53 billion.
In the past three months, the company’s shares have also outperformed the 4.4% and 9.6% growth in the Finance sector and the S&P 500 Index, respectively. Growing premiums, an active inorganic growth strategy, cost-curbing efforts, a strong liquidity position and strategic alliances are supporting its performance. These factors are collectively contributing to this Zacks Rank #3 (Hold) company's notable price appreciation.
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Can MET Retain Momentum?
The ingredients are there, and now let’s get into the details and show you how its estimates for the coming days stand.
The Zacks Consensus Estimate for MetLife’s 2024 full-year earnings is pegged at $8.81 per share, which indicates 20.2% year-over-year growth. It has witnessed two upward estimate revisions during the past month against one movement in the opposite direction. The company beat earnings estimates once in the last four quarters and missed on the other occasions.
The consensus mark for full-year 2024 revenues stands at nearly $73.8 billion, which suggests a 3% rise from the prior-year reported number. Growth in Latin America, Group Benefits and Asia segments in the coming days are likely to support top-line growth.
The consensus estimate for Latin America and Asia’s 2024 total adjusted revenues indicates nearly 10% and 8% year-over-year growth, respectively. The same for Group Benefits total adjusted revenues suggests a 4.6% increase from the year-ago period. Rising premiums, sales and volumes are expected to support growth in respective segments.
Its key strategic moves include expanding into vision care and pet insurance, venturing into private credit investments, and collaborating with different companies like Fidelity Investments to boost capabilities and product portfolios. Also, its cost-curbing efforts are boosting its margins. It reported a direct expense ratio of 12.2% in 2023, lower than the guided level of 12.6% and improving from the year-ago level of 12.5%.
MetLife exited the fourth quarter of 2023 with cash and cash equivalents of $20.6 billion, higher than the long-term debt of $15.5 billion. It generated a free cash flow of $3.6 billion in 2023. Its solid liquid position enhances its shareholder value-boosting efforts. In 2022 and 2023, it repurchased common shares of around $3.3 billion and $3.1 billion, respectively. The company has grown its dividend at a 5-year CAGR of 4.3%.
Risks
Despite the upside potential, there are a few factors that investors should keep an eye on.
Despite a high interest rate environment, its variable investment income declined 72.9% year over year in 2023. A softness in the real estate equity market can affect its investment income. Additionally, MET expects the group life mortality ratio to be in the range of 84-89% in the near term, the mid-point of which indicates 80 basis points growth from the 2023 level. Nevertheless, we believe that a systematic and strategic plan of action will drive its long-term growth.
Key Picks
Some better-ranked stocks in the broader Finance space are Ryan Specialty Holdings, Inc. RYAN, Root, Inc. ROOT and Brown & Brown, Inc. BRO, each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for Ryan Specialty’s 2024 full-year earnings indicates a 28.3% year-over-year increase. It beat earnings estimates in two of the past four quarters and met twice, with an average surprise of 5.1%. Also, the consensus mark for RYAN’s 2024 full-year revenues suggests 19.5% year-over-year growth.
The consensus mark for Root’s 2024 full-year earnings indicates a 23.1% year-over-year improvement. The earnings estimate has witnessed three upward estimate revisions in the past month against no movement in the opposite direction. Furthermore, the consensus estimate for ROOT’s 2024 full-year revenues suggests 101.8% year-over-year growth.
The Zacks Consensus Estimate for Brown & Brown’s 2024 full-year earnings is pegged at $3.29 per share, which indicates 17.1% year-over-year growth. The estimate jumped by 9 cents over the past month. BRO beat earnings estimates in each of the past four quarters, with an average surprise of 11.2%.
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