Reasons Why Investors Should Retain Manulife Financial (MFC)
Manulife Financial Corporation MFC has been favored by investors on the back of higher sales volumes, favorable product mix in individual insurance, improved investment income, financial flexibility and effective capital deployment.
Growth Projections
The Zacks Consensus Estimate for Manulife Financial’s 2023 and 2024 earnings per share is pegged at $2.44 and $2.66, indicating a year-over-year increase of 2.5% and 8.8%, respectively. The expected long-term earnings growth rate is pegged at 10%.
Northbound Estimate Revision
Estimates for 2024 have moved up nearly 0.7% in the past 60 days, reflecting investors’ optimism.
Earnings Surprise History
Manulife Financial surpassed earnings estimates in three of the last four quarters and missed in one, the average being 1.97%.
Zacks Rank & Price Performance
Manulife Financial currently carries a Zacks Rank #3 (Hold). In the past year, the stock has gained 9.1%, outperforming the industry’s growth of 8.2%.
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Return on Equity
MFC’s trailing 12-month return on equity was 13.5%, which expanded 100 basis points year over year. This reflects its efficiency in utilizing shareholders’ fund.
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.
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’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 negatively 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 life insurance industry are NN Group NV Unsponsored ADR NNGRY, GoHealth, Inc. GOCO and Primerica, Inc. PRI. While NN Group NV sports a Zacks Rank #1 (Strong Buy), GoHealth and Primerica carry a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for NN Group NV’s 2023 and 2024 earnings per share is pegged at $2.73 and $3.90, indicating an increase of 268.92% and 42.86% year over year, respectively. In the past year, NNGRY has lost 19.5%.
The Zacks Consensus Estimate for NNGRY’s 2023 and 2024 earnings has moved 50% and 40% north, respectively, in the past seven days, reflecting analysts’ optimism on the stock.
The Zacks Consensus Estimate for GoHealth’s 2023 and 2024 earnings per share indicates an increase of 75.6% and 33.8% year over year, respectively. In the past year, GOCO has rallied 135.6%.
The Zacks Consensus Estimate for GoHealth’s 2023 and 2024 revenues is pegged at $820.76 million and $892.27 million, indicating an increase of 29.9% and 8.7% year over year, respectively.
Primerica has a solid track record of beating earnings estimates in each of the last four quarters, the average being 6.46%. In the past year, PRI has gained 47.2%.
The Zacks Consensus Estimate for PRI’s 2023 and 2024 earnings per share is pegged at $15.63 and $17.37, indicating an increase of 36.6% and 11.1% year over year, respectively.
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Manulife Financial Corp (MFC) : Free Stock Analysis Report
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