It has been about a month since the last earnings report for MetLife (MET Quick QuoteMET - Free Report) . Shares have added about 13% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is MetLife due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.

MetLife (MET Quick QuoteMET - Free Report) Q4 Earnings Beat Estimates, Revenues Rise Y/Y

MetLife, Inc.  delivered fourth-quarter 2020 adjusted operating earnings of $2.03 per share beat the Zacks Consensus Estimate by 32.7%. The bottom line also improved 3% year over year.

The company’s results benefited from higher revenues, robust underwriting results and improved variable investment income, partly offset by elevated costs.

Behind the Headlines

The company’s adjusted operating revenues of $20.6 billion climbed 13% year over year. Further, the top line outpaced the Zacks Consensus Estimate by 29.1%.

Adjusted premiums, fees and other revenues excluding pension risk transfer (PRT) grew 4% year over year to $11.5 billion.
Adjusted net investment income of $4.9 billion improved 8% year over year courtesy of increased private equity returns.

Total expenses of $19.3 billion escalated 12.1% year over year, due to higher policyholder benefits and claims, interest credited to policyholder account balances, and interest expense on debt.

Adjusted expense ratio, excluding total notable items related to other expenses and PRT, came in at 20.6%, reflecting an improvement of 90 basis points (bps) year over year.

Adjusted book value per share in the fourth quarter was $54.18, which grew 11% year over year.

Adjusted return on equity was 15.2%, down 120 bps year over year.

Quarterly Segment Details

U.S.

Adjusted earnings in this segment surged 51% year over year to $1 billion attributable to volume growth, higher variable investment income and sound underwriting results.
Adjusted premiums, fees and other revenues were $10.6 billion, which improved 23% year over year owing to pension risk transfer transactions in Retirement and Income Solutions sub-segment.

Asia

Adjusted earnings of $494 million rose 45% year over year courtesy of volume growth, rise in variable investment income, and sound underwriting results and expense margins.

Adjusted premiums, fees & other revenues were $2.2 billion, which grew 4% year over year.

Latin America

Adjusted earnings of $14 million plunged 91% year over year, due to weaker underwriting results stemming from the COVID-19 pandemic.
Adjusted premiums, fees & other revenues were $878 million, which dipped 1% year over year.

EMEA

Adjusted earnings from EMEA improved 23% year over year to $81 million. Also, adjusted earnings on a constant currency basis climbed 27% year over year attributable to volume growth, and sound underwriting results and expense margins.

Adjusted premiums, fees & other revenues of $707 million increased 6% year over year.

MetLife Holdings

Adjusted earnings from MetLife Holdings totaled $426 million, which advanced 58% year over year, courtesy of improved variable investment income and expense margins, and strong underwriting results.

Adjusted premiums, fees & other revenues were $1.3 billion, down 4% year over year.

Corporate & Other

The segment reported adjusted loss of $198 million in the fourth quarter against the prior-year quarter adjusted earnings of $322 million.

Financial Update

As of Dec 31, 2020, shareholders’ equity was $74.6 billion, which improved 12.7% from the level at 2019 end.

Long-term debt as of the fourth-quarter end was $14.6 billion, which increased 8.4% from the level at 2019 end.

Cash and cash equivalents of $19.8 billion as of Dec 31, 2020 were up 19.3% from the level at 2019 end.

Share Repurchase Update

The company bought back shares worth $571 million in the fourth quarter.

Full-Year Update

For 2020, the company’s adjusted operating revenues totaled $66.5 billion, down 1% year over year. Full-year adjusted earnings per share was $6.16, which inched up 1% year over year.

Total expenses of $60.9 billion for 2020 declined 3% year over year. Adjusted expense ratio, excluding total notable items related to other expenses and PRT, came in at 19.9%, reflecting an improvement of 40 bps year over year.

Adjusted return on equity was 11.9%, down 120 bps year over year. During 2020, the company repurchased shares worth $1.2 billion.

Near-Term Targets

In the near term, the company expects adjusted return on equity to be 12-14%. While free cash flow ratio is anticipated to stay in the range of 65-75% of adjusted earnings, direct expense ratio is projected to be lower than 12.3%.

Corporate Guidance for 2021

While the company anticipates variable investment income to be $1.2-$1.4 billion for this year, it expects adjusted loss in the Corporate & Other segment between $650 million and $750 million in the same time frame.


 

How Have Estimates Been Moving Since Then?

It turns out, fresh estimates have trended downward during the past month.

VGM Scores

Currently, MetLife has a subpar Growth Score of D, however its Momentum Score is doing a bit better with a C. However, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, MetLife has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.