Should You Hold Manulife Financial (MFC) in Your Portfolio?
Manulife Financial Corporation MFC has been in investors' good books on the back of higher sales volumes, favorable product mix in individual insurance, new business gains and financial flexibility.
Growth Projections
The Zacks Consensus Estimate for Manulife Financial’s 2023 earnings per share is pegged at $2.73, indicating a year-over-year increase of 6.6%. The expected long-term earnings growth rate is pegged at 10%.
Earnings Surprise History
Manulife Financial has a solid track record of beating earnings estimates in five of the last seven quarters.
Zacks Rank & Price Performance
Manulife Financial currently carries a Zacks Rank #3 (Hold). In the past year, the stock has lost 14.6% compared with the industry’s decline of 18.5%.
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Return on Equity (ROE)
Manulife Financial’s trailing 12-month return on equity (ROE) was 12.8%, which expanded 20 basis points year over year. ROE reflects its efficiency in using shareholders’ funds.
Business Tailwinds
The life insurer stands to gain from three of its highest potential operating division, Asia, Canada and Global Wealth and Asset Management (“WAM”).
Riding on higher sales volumes, a favorable product mix in individual insurance in Canada and the favorable impact of product re-pricing in Hong Kong, new business gains are expected be higher.
Higher new business gains, solid net fee income from higher average assets under management and administration in the Global Wealth and Asset Management business, higher investment income and double-digit in-force business growth in Canada and Asia are likely to benefit the core earnings of Manulife Financial.
In Global WAM, Manulife Financial declared to unveil the Real Asset Investment Strategy in Canada, which will provide investors access to a mix of global private and public real asset investments. This in turn will combine the benefits of broad private asset exposure with the liquidity benefits of allocating to public markets.
Higher sales volumes, favorable interest rates as well as a favorable product mix, higher margins in annuities and international business are expected to drive New business value (NBV) .
In Asia, MFC has started offering insurance solutions to the customers of VietinBank, as part of the new 16-year exclusive bancassurance partnership in Vietnam. In the United States., MFC closed the transaction to reinsure over 75% of the legacy variable annuity block, resulting in the release of $2.4 billion of capital.
Manulife remains focused on driving efficient growth, ensuring scalable growth, offering outstanding customer experience as well as digital ways of working.
The life insurer boasts financial flexibility by virtue of solid growth in new business value, robust annualized premium equivalent sales growth and a solid balance sheet. Manulife had $25 billion of capital above the supervisory target in the first quarter of 2022 and the LICAT ratio continued to remain strong.
Banking on operational excellence, the life insurer increased its dividend at an eight-year (2015-2022) CAGR of 5.3%. Its current dividend yield of 6.1% is higher than the industry average of 4.4%.
Stocks to Consider
Some better-ranked stocks from the insurance industry are Brighthouse Financial, Inc. BHF, HCI Group, Inc. HCI and American Financial Group, Inc. AFG, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Brighthouse Financial’s earnings surpassed estimates in each of the last four quarters, the average earnings surprise being 55.91%. In the past year, BHF's stock has lost 7.4%.
The Zacks Consensus Estimate for BHF’s 2022 and 2023 earnings has moved 4.3% and 0.6% north, respectively, in the past 30 days.
The Zacks Consensus Estimate for HCI Group’s 2022 and 2023 earnings has moved 33.3% and 40% north, respectively, in the past 60 days. In the past year, HCI Group’s stock has lost 35.6%.
The Zacks Consensus Estimate for HCI’s 2022 and 2023 earnings per share indicates a year-over-year increase of 280.9% and 75%, respectively.
American Financial’s earnings surpassed estimates in each of the last four quarters, the average beat being 41.72%. In the past year, American Financial has gained 7.5%.
The Zacks Consensus Estimate for AFG’s 2022 and 2023 earnings has moved 9.8% and 6.9% north, respectively, in the past 30 days.
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