Manulife Financial Corporation MFC is poised for long-term growth on the back of its thriving Asian business, expanding wealth and asset management business, cost control initiatives and strong capital position. Estimates have been revised upward over the past 30 days, reflecting analysts’ confidence in the stock before earnings. The Zacks Consensus Estimate for 2018 earnings has moved north by 2% to $2.08 and by 0.2% to $2.21 for 2019.
The company’s Asia operations contribute significantly to its earnings. Continued expansion of distribution network across the region and strategically important distribution agreements should continue to aid results.
Manulife is consistently expanding its wealth and asset management business and had more than $1.1 trillion in global assets under management (AUM) and administration at third-quarter 2018 end. Plans of expansion in Europe and compelling presence in North America and Asia raise optimism.
Manulife Financial’s stable cash flow and sufficient cash balances will continue to boost liquidity. Banking on operational efficiencies, the company has hiked its dividend six times over a span of three years. The life insurer is focused on optimizing its portfolio with an intention to release $5 billion in capital by 2022.
The company also targets lower costs to reach an expense efficiency ratio of less than 50% or $1 billion in cost savings by 2022.
This provider of financial advice, insurance, and wealth and asset management solutions for individuals, groups and institutions in Asia, Canada and the United States carries an impressive VGM Score of A. Back tested results have shown that stocks with a favorable Value Score of A or B coupled with a solid Zacks Rank #1 (Strong Buy) and 2 (Buy) offer the best investment opportunity.
Valuation looks attractive at current level as the price-to-book multiple of 1 is lower than the industry average of 1.8.
Shares of this Zacks Rank #2 life insurer have lost 20.4% year to date compared with the industry’s 23.2% decrease.
The Zacks Consensus Estimate for current-year earnings per share is pegged at $2.08, indicating a year-over-year increase of 21.6%. For 2019, the consensus mark for the bottom line stands at $2.21, translating into a 6.3% year-over-year rise. The company’s expected long-term earnings growth is pegged at 10%.
Other Stocks to Consider
Investors interested in life insurers can look at Athene Holding Ltd. ATH, Reinsurance Group of America, Inc. RGA and Torchmark Corp. TMK.
Athene Holding, a retirement services company, issues, reinsures and acquires retirement savings products in the United States, the District of Columbia and Germany. The company delivered a 14.71% positive surprise in the last reported quarter and sports a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
Reinsurance Group of America offers individual and group life and health insurance products. The company delivered a 25.55% positive surprise in the last reported quarter. It carries a Zacks Rank #2.
Torchmark provides various life and health insurance products and annuities in the United States, Canada and New Zealand. It came up with a 4.61% positive surprise in the last reported quarter. It carries a Zacks Rank #2.
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