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Manulife vs. Sun Life: Which Stock Appears More Appealing?
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An improving interest rate environment comes as a breather for life insurers which suffered spread compression on products like fixed annuities and universal life due to persistently low rates. Post-presidential election, the Fed has hiked rates three times, reflecting the Fed’s confidence in the improving U.S. economy.
To insulate itself from low rate environment, life insurers have lowered exposure to interest-sensitive product lines. They have braced their portfolios by redesigning and re-pricing products with the potential to help in writing higher premiums. These insurers have also effectively reduced their underwriting expenses with a view to support bottom-line growth.
In addition, stronger corporate bonds and improving real estate market should help curtail credit-related investment losses.
Also, the improving economy indicates more disposable income and hence people opting for more insurance coverages, will drive the premiums higher for life insurers.
Though the Life Insurance industry is currently ranked at #171 (lies at the bottom half of the Zacks Industry Rank for 267 industries), it has outperformed the S&P 500 in a year by registering a rally of 36.8%. The index on the other hand has climbed 11.6%.
Here we focus on two life insurers. Manulife Financial Corp. (MFC - Free Report) is one of the three dominant life insurers within Canada, provides financial advice, insurance, and wealth and asset management solutions for individuals, groups and institutions in Asia, Canada and the United States.
Whereas Sun Life Financial Inc. (SLF - Free Report) is the third largest insurer in Canada provides protection and wealth management products and services to individual and group customers worldwide. While Manulife Financial has a market capitalization of $38.82 billion, Sun Life Financial has $23.58 billion of the same.
It will be interesting to note which stock is better positioned in terms of fundamentals.
Investors interested in the life insuarnce industry can look at Health Insurance Innovations, Inc. , flaunting a Zacks Rank #1 (Strong Buy) and Reinsurance Group of America, Inc. (RGA - Free Report) acrrying Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1Rank stocks here.
Zacks Rank
While Manulife flaunts a Zacks Rank #1, Sun Life carries a Zacks Rank #2. Though both are Buy rated stocks, Manulife has an edge over Sun Life, thus winning the round with conviction.
Price Performance
Manulife has outpaced the industry with shares surging 44.3% in a year’s time, while Sun Life shares have gained 20.9% lagging the same. Here too, Manulife emerges a clear winner.
Valuation
The price to book value metric is the best multiple, used for valuing insurers. Compared with Life Insurance Industry’s P/B ratio of 2.36, Sun Life is underpriced with a reading of 1.55. Meanwhile, Manulife is much cheaper with a trailing 12-month P/B multiple of 1.30. This round also goes to Manulife as the company’s shares are cheaper than Sun Life’s.
Debt-to-Equity
Manulife’s debt-to-equity ratio of 12.5 is lower than the industry average of 17.2. Sun Life with a leverage ratio of 27.6 compares unfavorably with the industry. This round again goes to Manulife.
Return on Equity
Both Manulife and Sun Life have higher return on equity compared with the industry average of 7.00%. Manulife with a return on equity of 13.29% has an edge over Sun Life with the same of 11.33%. Hence, Sun Life has an edge over Manulife in this round.
Dividend Yield
Manulife’s dividend yield is 3.31%, while Sun Life’s is 3.28%. Both have a dividend yield that outshines the industry’s average of 1.56%. Comparatively, Manulife has an edge over Sun Life.
Earnings Surprise History
In terms of the companies’ surprise history, Manulife has surpassed the Zacks Consensus Estimate in the last four quarters with an average beat of 11.08%. Whereas, Sun Life delivered positive surprises in three the last four quarters with a four-quarter average beat of 10.53%.
Manulife has a visible edge over Sun Life.
Earnings Estimate Revisions and Growth Projections
Sun Life’s estimates have increased 9.8% for 2017 and 8.9% for 2018 in the last 60 days. On the other hand, Manulife’s estimates have moved up 11.3% for 2017 and 8.5% for 2018 over the same time frame.
For Sun Life, the Zacks Consensus Estimate for earnings per share is $3.13 for 2017, reflecting a year-over-year increase of 2.35%. For 2018, the Zacks Consensus Estimate for earnings per share is pegged at $3.41, representing a year-over-year rise of 8.94%. Sun Life has long-term expected earnings per share growth of 7.0%.
For Manulife, the Zacks Consensus Estimate for earnings per share is $1.77 for 2017, reflecting a year-over-year increase of 20.18%. For 2018, the Zacks Consensus Estimate for earnings per share is pegged at $1.91, representing a year-over-year rise of 8.1%. Manulife has long-term expected earnings per share growth of 9.5%.
This round slightly favors Manulife.
To Conclude
Our comparative analysis shows Manulife has an edge over Sun Life with respect to Zacks Rank, price performance, leverage, valuation, dividend yield, earnings surprise history, earnings estimate revisions and growth projections. Only on the parameter of return on equity, Sun Life scores over Manulife. Therefore, Manulife has a clear advantage over Sun Life.
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Manulife vs. Sun Life: Which Stock Appears More Appealing?
An improving interest rate environment comes as a breather for life insurers which suffered spread compression on products like fixed annuities and universal life due to persistently low rates. Post-presidential election, the Fed has hiked rates three times, reflecting the Fed’s confidence in the improving U.S. economy.
To insulate itself from low rate environment, life insurers have lowered exposure to interest-sensitive product lines. They have braced their portfolios by redesigning and re-pricing products with the potential to help in writing higher premiums. These insurers have also effectively reduced their underwriting expenses with a view to support bottom-line growth.
In addition, stronger corporate bonds and improving real estate market should help curtail credit-related investment losses.
Also, the improving economy indicates more disposable income and hence people opting for more insurance coverages, will drive the premiums higher for life insurers.
Though the Life Insurance industry is currently ranked at #171 (lies at the bottom half of the Zacks Industry Rank for 267 industries), it has outperformed the S&P 500 in a year by registering a rally of 36.8%. The index on the other hand has climbed 11.6%.
Here we focus on two life insurers. Manulife Financial Corp. (MFC - Free Report) is one of the three dominant life insurers within Canada, provides financial advice, insurance, and wealth and asset management solutions for individuals, groups and institutions in Asia, Canada and the United States.
Whereas Sun Life Financial Inc. (SLF - Free Report) is the third largest insurer in Canada provides protection and wealth management products and services to individual and group customers worldwide. While Manulife Financial has a market capitalization of $38.82 billion, Sun Life Financial has $23.58 billion of the same.
It will be interesting to note which stock is better positioned in terms of fundamentals.
Investors interested in the life insuarnce industry can look at Health Insurance Innovations, Inc. , flaunting a Zacks Rank #1 (Strong Buy) and Reinsurance Group of America, Inc. (RGA - Free Report) acrrying Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1Rank stocks here.
Zacks Rank
While Manulife flaunts a Zacks Rank #1, Sun Life carries a Zacks Rank #2. Though both are Buy rated stocks, Manulife has an edge over Sun Life, thus winning the round with conviction.
Price Performance
Manulife has outpaced the industry with shares surging 44.3% in a year’s time, while Sun Life shares have gained 20.9% lagging the same. Here too, Manulife emerges a clear winner.
Valuation
The price to book value metric is the best multiple, used for valuing insurers. Compared with Life Insurance Industry’s P/B ratio of 2.36, Sun Life is underpriced with a reading of 1.55. Meanwhile, Manulife is much cheaper with a trailing 12-month P/B multiple of 1.30. This round also goes to Manulife as the company’s shares are cheaper than Sun Life’s.
Debt-to-Equity
Manulife’s debt-to-equity ratio of 12.5 is lower than the industry average of 17.2. Sun Life with a leverage ratio of 27.6 compares unfavorably with the industry. This round again goes to Manulife.
Return on Equity
Both Manulife and Sun Life have higher return on equity compared with the industry average of 7.00%. Manulife with a return on equity of 13.29% has an edge over Sun Life with the same of 11.33%. Hence, Sun Life has an edge over Manulife in this round.
Dividend Yield
Manulife’s dividend yield is 3.31%, while Sun Life’s is 3.28%. Both have a dividend yield that outshines the industry’s average of 1.56%. Comparatively, Manulife has an edge over Sun Life.
Earnings Surprise History
In terms of the companies’ surprise history, Manulife has surpassed the Zacks Consensus Estimate in the last four quarters with an average beat of 11.08%. Whereas, Sun Life delivered positive surprises in three the last four quarters with a four-quarter average beat of 10.53%.
Manulife has a visible edge over Sun Life.
Earnings Estimate Revisions and Growth Projections
Sun Life’s estimates have increased 9.8% for 2017 and 8.9% for 2018 in the last 60 days. On the other hand, Manulife’s estimates have moved up 11.3% for 2017 and 8.5% for 2018 over the same time frame.
For Sun Life, the Zacks Consensus Estimate for earnings per share is $3.13 for 2017, reflecting a year-over-year increase of 2.35%. For 2018, the Zacks Consensus Estimate for earnings per share is pegged at $3.41, representing a year-over-year rise of 8.94%. Sun Life has long-term expected earnings per share growth of 7.0%.
For Manulife, the Zacks Consensus Estimate for earnings per share is $1.77 for 2017, reflecting a year-over-year increase of 20.18%. For 2018, the Zacks Consensus Estimate for earnings per share is pegged at $1.91, representing a year-over-year rise of 8.1%. Manulife has long-term expected earnings per share growth of 9.5%.
This round slightly favors Manulife.
To Conclude
Our comparative analysis shows Manulife has an edge over Sun Life with respect to Zacks Rank, price performance, leverage, valuation, dividend yield, earnings surprise history, earnings estimate revisions and growth projections. Only on the parameter of return on equity, Sun Life scores over Manulife. Therefore, Manulife has a clear advantage over Sun Life.
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market. Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2020. Click here for the 6 trades >>