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Manulife (MFC) Shares Up 11% YTD: More Room for Upside?
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Manulife Financial Corporation (MFC - Free Report) shares have rallied 10.6% year to date, outperforming the industry’s increase of 7.4%, the Finance sector’s increase of 7.4% and the S&P 500 Composite’s gain of 7.4%. With a market capitalization of $44.4 billion, the average volume of shares traded in the last three months was 3.4 million.
The strength of its Asia business, expanding Wealth and Asset Management business and solid capital position continue to drive this Zacks Rank #2 (Buy) life insurer. MFC, one of the three dominant life insurers within the domestic Canadian market, has delivered an earnings surprise in the last five quarters.
Manulife’s return on equity (ROE) for the trailing 12 months is 16%, better than the industry’s average of 15.4%. This reflects Manulife’s efficiency in utilizing shareholders’ funds. It targets 13% ROE over the medium term.
Image Source: Zacks Investment Research
Growth Drivers
The Zacks Consensus Estimate for 2024 and 2025 earnings per share (EPS) is $2.71 and $2.97, respectively, suggesting an increase of 5.5% and 9.7%.
While earnings have grown 4.9% over the last five years, the long-term earnings growth rate is currently pegged at 10%. Manulife targets core EPS growth between 10% and 12% over the medium term.
Manulife’s Asia business plays a crucial part in its long-term growth and targets it to account for half of the company’s core earnings by 2025. The insurer is continually scaling up its business across Asia. We believe MFC is well-poised to capitalize on the growing opportunities of the Asia market by banking on its strategic initiatives.
Manulife is expanding its Wealth and Asset Management business and has identified Europe and the wider EMEA market as a significant growth area. It is continually making long-term investments in this region.
MFC has been accelerating growth in the highest potential businesses and targets two-thirds of core earnings from these businesses. Its inorganic growth is impressive as this life insurer prudently deploys capital in high-growth, less capital-intensive and higher-return businesses.
The insurance industry is undergoing accelerated digitalization. In sync with the industry trend, Manulife is continually building on its digital platform as well as accelerating the adoption of new technologies such as generative AI.
A sturdy capital position helps MFC distribute wealth to investors as dividends. The insurer has increased its dividend at a six-year CAGR of 10% and targets a 35-45% dividend payout over the medium term.
MFC is strengthening its balance sheet and thus targets a leverage ratio of 25%. Notably, its free cash flow conversion has remained more than 100% over the last many quarters, reflecting its solid earnings.
Attractive Valuation
The company’s shares are trading at a price-to-book multiple of 1.42, lower than the industry average of 1.84. Before valuation expands, it is wise to take a position in the stock.
This insurer has a Value Score of A, reflecting an attractive valuation.
Sun Life delivered a trailing four-quarter average earnings surprise of 3.32%. The stock has lost 0.4% year to date. The Zacks Consensus Estimate for SLF’s 2024 and 2025 earnings indicates an 8.1% and 6.4% year-over-year increase, respectively.
Primerica delivered a trailing four-quarter average earnings surprise of 3.10%. The stock has gained 21% year to date. The Zacks Consensus Estimate for PRI’s 2024 and 2025 earnings translates to a 10.5% and 10% year-over-year increase, respectively.
Assurant delivered a trailing four-quarter average earnings surprise of 42.15%. The stock has gained 23.8% year to date. The Zacks Consensus Estimate for AIZ’s 2024 and 2025 earnings translates to a 3.5% and 7.7% year-over-year increase, respectively.
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Manulife (MFC) Shares Up 11% YTD: More Room for Upside?
Manulife Financial Corporation (MFC - Free Report) shares have rallied 10.6% year to date, outperforming the industry’s increase of 7.4%, the Finance sector’s increase of 7.4% and the S&P 500 Composite’s gain of 7.4%. With a market capitalization of $44.4 billion, the average volume of shares traded in the last three months was 3.4 million.
The strength of its Asia business, expanding Wealth and Asset Management business and solid capital position continue to drive this Zacks Rank #2 (Buy) life insurer. MFC, one of the three dominant life insurers within the domestic Canadian market, has delivered an earnings surprise in the last five quarters.
Manulife’s return on equity (ROE) for the trailing 12 months is 16%, better than the industry’s average of 15.4%. This reflects Manulife’s efficiency in utilizing shareholders’ funds. It targets 13% ROE over the medium term.
Image Source: Zacks Investment Research
Growth Drivers
The Zacks Consensus Estimate for 2024 and 2025 earnings per share (EPS) is $2.71 and $2.97, respectively, suggesting an increase of 5.5% and 9.7%.
While earnings have grown 4.9% over the last five years, the long-term earnings growth rate is currently pegged at 10%. Manulife targets core EPS growth between 10% and 12% over the medium term.
Manulife’s Asia business plays a crucial part in its long-term growth and targets it to account for half of the company’s core earnings by 2025. The insurer is continually scaling up its business across Asia. We believe MFC is well-poised to capitalize on the growing opportunities of the Asia market by banking on its strategic initiatives.
Manulife is expanding its Wealth and Asset Management business and has identified Europe and the wider EMEA market as a significant growth area. It is continually making long-term investments in this region.
MFC has been accelerating growth in the highest potential businesses and targets two-thirds of core earnings from these businesses. Its inorganic growth is impressive as this life insurer prudently deploys capital in high-growth, less capital-intensive and higher-return businesses.
The insurance industry is undergoing accelerated digitalization. In sync with the industry trend, Manulife is continually building on its digital platform as well as accelerating the adoption of new technologies such as generative AI.
A sturdy capital position helps MFC distribute wealth to investors as dividends. The insurer has increased its dividend at a six-year CAGR of 10% and targets a 35-45% dividend payout over the medium term.
MFC is strengthening its balance sheet and thus targets a leverage ratio of 25%. Notably, its free cash flow conversion has remained more than 100% over the last many quarters, reflecting its solid earnings.
Attractive Valuation
The company’s shares are trading at a price-to-book multiple of 1.42, lower than the industry average of 1.84. Before valuation expands, it is wise to take a position in the stock.
This insurer has a Value Score of A, reflecting an attractive valuation.
Other Stocks to Consider
Some other top-ranked stocks from the insurance space are Sun Life Financial (SLF - Free Report) , Primerica (PRI - Free Report) and Assurant Inc. (AIZ - Free Report) . Each stock presently carries a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here
Sun Life delivered a trailing four-quarter average earnings surprise of 3.32%. The stock has lost 0.4% year to date. The Zacks Consensus Estimate for SLF’s 2024 and 2025 earnings indicates an 8.1% and 6.4% year-over-year increase, respectively.
Primerica delivered a trailing four-quarter average earnings surprise of 3.10%. The stock has gained 21% year to date. The Zacks Consensus Estimate for PRI’s 2024 and 2025 earnings translates to a 10.5% and 10% year-over-year increase, respectively.
Assurant delivered a trailing four-quarter average earnings surprise of 42.15%. The stock has gained 23.8% year to date. The Zacks Consensus Estimate for AIZ’s 2024 and 2025 earnings translates to a 3.5% and 7.7% year-over-year increase, respectively.