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Is MetLife (MET) Well Poised for an Earnings Beat in Q3?
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MetLife Inc. (MET - Free Report) is set to report third-quarter 2016 financial results on Nov 2, after the closing bell.
Last quarter, MetLife missed the estimates by 38.97% and the average miss for the trailing four quarters is 28.03%. Will MetLife reverse the trend this time around?
Earnings Whispers
Our proven model shows that MetLife is likely to beat on earnings as it has the right combination of two key components. Note that a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy) or #2 (Buy) or at least #3 (Hold) to have a significantly higher chance of beating estimates.
Zacks ESP: MetLife’s Most Accurate estimate is pegged at $1.19 per share, which is higher the Zacks Consensus Estimate of $1.17. The Earnings ESP is thus +1.71%. This is a meaningful indicator of a likely positive surprise. Please check our Earnings ESP Filter that enables you find stocks that are expected to come out with earnings surprises.
Zacks Rank: MetLife has a Zacks Rank #3, which increases the predictive power of ESP.
Why a Likely Positive Surprise?
The company’s property and casualty segment might see improved results from auto insurance as a result of rate increases.
Moreover, global expansion through acquisitions and strategic alliances along with a diversified portfolio and prudent underwriting will support earnings.
The last quarter suffered from foreign exchange, volatile equity markets and low interest rates and we expect the same factors to be an earnings dampener this quarter as well.
Moreover, MetLife's earnings will likely see the adverse effect of deteriorating net investment income while weaker yields are expected to weigh on revenues. Variable investment income is also expected to decline due to a weak hedge fund performance.
The company’s bottom line will be aided by its expense management initiatives. MetLife is targeting $1 billion in pre-tax run rate expense savings by the end of 2019.
The company continues to take pricing and underwriting actions in auto. These actions will likely yield improved results in the third and fourth quarters of 2016.
We expect a decline in operating earnings from Asia as the company is intentionally declining the sales of yen denominated products following the withdrawal of single premium Accident and Health and Whole Life yen-denominated products in Japan.
Here are some other companies you may want to consider as our model shows that these have the right combination of elements to post an earnings beat this quarter:
Allstate Corp. (ALL - Free Report) has an Earnings ESP of +1.61% and carries a Zacks Rank #3. The company is slated to report third-quarter earnings results on Nov 2.
Cigna Corp. (CI - Free Report) has an Earnings ESP of +2.62% and carries a Zacks Rank #3. The company is slated to report third-quarter earnings results on Nov 3.
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Is MetLife (MET) Well Poised for an Earnings Beat in Q3?
MetLife Inc. (MET - Free Report) is set to report third-quarter 2016 financial results on Nov 2, after the closing bell.
Last quarter, MetLife missed the estimates by 38.97% and the average miss for the trailing four quarters is 28.03%. Will MetLife reverse the trend this time around?
Earnings Whispers
Our proven model shows that MetLife is likely to beat on earnings as it has the right combination of two key components. Note that a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy) or #2 (Buy) or at least #3 (Hold) to have a significantly higher chance of beating estimates.
Zacks ESP: MetLife’s Most Accurate estimate is pegged at $1.19 per share, which is higher the Zacks Consensus Estimate of $1.17. The Earnings ESP is thus +1.71%. This is a meaningful indicator of a likely positive surprise. Please check our Earnings ESP Filter that enables you find stocks that are expected to come out with earnings surprises.
Zacks Rank: MetLife has a Zacks Rank #3, which increases the predictive power of ESP.
Why a Likely Positive Surprise?
The company’s property and casualty segment might see improved results from auto insurance as a result of rate increases.
Moreover, global expansion through acquisitions and strategic alliances along with a diversified portfolio and prudent underwriting will support earnings.
The last quarter suffered from foreign exchange, volatile equity markets and low interest rates and we expect the same factors to be an earnings dampener this quarter as well.
Moreover, MetLife's earnings will likely see the adverse effect of deteriorating net investment income while weaker yields are expected to weigh on revenues. Variable investment income is also expected to decline due to a weak hedge fund performance.
The company’s bottom line will be aided by its expense management initiatives. MetLife is targeting $1 billion in pre-tax run rate expense savings by the end of 2019.
The company continues to take pricing and underwriting actions in auto. These actions will likely yield improved results in the third and fourth quarters of 2016.
We expect a decline in operating earnings from Asia as the company is intentionally declining the sales of yen denominated products following the withdrawal of single premium Accident and Health and Whole Life yen-denominated products in Japan.
METLIFE INC Price and EPS Surprise
METLIFE INC Price and EPS Surprise | METLIFE INC Quote
Other Stocks That Warrant a Look
Here are some other companies you may want to consider as our model shows that these have the right combination of elements to post an earnings beat this quarter:
Hercules Capital, Inc. (HTGC - Free Report) is scheduled to release third-quarter earnings results on Nov 3. The company has an Earnings ESP of +3.13% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Allstate Corp. (ALL - Free Report) has an Earnings ESP of +1.61% and carries a Zacks Rank #3. The company is slated to report third-quarter earnings results on Nov 2.
Cigna Corp. (CI - Free Report) has an Earnings ESP of +2.62% and carries a Zacks Rank #3. The company is slated to report third-quarter earnings results on Nov 3.
Confidential from Zacks
Beyond this Analyst Blog, would you like to see Zacks' best recommendations that are not available to the public? Our Executive VP, Steve Reitmeister, knows when key trades are about to be triggered and which of our experts has the hottest hand. Click to see them now>>