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What's in Store for MetLife (MET) This Earnings Season?
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MetLife Inc. (MET - Free Report) is scheduled to report fourth-quarter results on Jan 31, after market close.
We expect the company’s Property and Casualty (P&C) segment to benefit from improvements in the auto insurance business. The company has been making targeted rate increases in auto insurance in recent years. These price increases, along with other management actions, will drive profitability in this line of business. Overall, P&C sales may also benefit from price increases and management actions to drive value. Net income for this subsegment is expected at $80 million, up 86% year over year.
We expect the company’s U.S. business segment to showcase a strong quarter of earnings and sales from Retirement and Income Solutions driven by higher sales of pension risk transfers and stable value products.
In its Asia business, we expect to see increased sales driven by a successful sales campaign in Korea, as well as a larger agency force and continued success of its whole life critical illness product in China. These increases will be partially offset by lower yen-denominated life product sales in Japan and the continued impact from regulatory changes in Hong Kong. The Zacks Consensus Estimate for net income from this segment is pegged at $312 million, down 11.9%.
In its Latin America business, we expect growth across several lines of business within Mexico and Chile, which should drive increased premiums and policy fee income. Positive net flows, primarily from Mexico and Chile should result in an increase in average invested assets and generated higher net investment income. The Zacks Consensus Estimate for net income from this segment is pegged at $149 million, up 22% year over year.
In its EMEA business, we expect to see growth across several European markets and in its accident & health and credit life businesses in Turkey, partially offset by lower premium persistency in its employee benefits business in the Gulf. The Zacks Consensus Estimate for net income from this segment is pegged at $79 million, up 9.7% year over year.
MetLife has been generating enough free cash flow, which it uses for investment purposes and buying back shares. Repurchases made by the company in the fourth quarter will aid its bottom line.
We also expect to see an increase in variable investment income driven by a favorable hedge fund performance and strong private equity. The company’s bottom line will be aided by its expense management initiatives.
Earnings Surprise History
The company boasts an attractive earnings surprise history. It beat estimates in each of the trailing four reported quarters, with an average positive surprise of 9.6%.
Our proven model does not conclusively show that MetLife is likely to beat on earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a favorable Zacks Rank #1, 2 or 3 for this to happen. But that is not the case here as you will see below.
Zacks ESP: MetLife has an Earning ESP of -0.15%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: MetLife carries a Zacks Rank #3 (Hold), which increases the predictive power of ESP. However, we need to have a positive ESP to be confident about an earnings surprise.
We caution against Sell-rated stocks (#4 or 5) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks to Consider
Here are some companies from the insurance sector that you may want to consider as these have the right combination of elements to beat on earnings this quarter.
Amerisafe Inc. (AMSF - Free Report) will likely report fourth-quarter 2017 earnings results on Feb 28. The company has an Earnings ESP of +1.61% and a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Unum Group (UNM - Free Report) has an Earnings ESP of +0.83% and a Zacks Rank of 2. The company is expected to report fourth-quarter earnings results on Jan 31.
Trupanion, Inc. (TRUP - Free Report) has an Earnings ESP of +100%. This Zacks #2 Ranked company is expected to report fourth-quarter earnings results on Feb 13.
Zacks Top 10 Stocks for 2018
In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-hold tickers for the entirety of 2018?
Last year's 2017 Zacks Top 10 Stocks portfolio produced double-digit winners, including FMC Corp. and VMware which racked up stellar gains of +67.9% and +61%. Now a brand-new portfolio has been handpicked from over 4,000 companies covered by the Zacks Rank. Don’t miss your chance to get in on these long-term buys.
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What's in Store for MetLife (MET) This Earnings Season?
MetLife Inc. (MET - Free Report) is scheduled to report fourth-quarter results on Jan 31, after market close.
We expect the company’s Property and Casualty (P&C) segment to benefit from improvements in the auto insurance business. The company has been making targeted rate increases in auto insurance in recent years. These price increases, along with other management actions, will drive profitability in this line of business. Overall, P&C sales may also benefit from price increases and management actions to drive value. Net income for this subsegment is expected at $80 million, up 86% year over year.
We expect the company’s U.S. business segment to showcase a strong quarter of earnings and sales from Retirement and Income Solutions driven by higher sales of pension risk transfers and stable value products.
In its Asia business, we expect to see increased sales driven by a successful sales campaign in Korea, as well as a larger agency force and continued success of its whole life critical illness product in China. These increases will be partially offset by lower yen-denominated life product sales in Japan and the continued impact from regulatory changes in Hong Kong. The Zacks Consensus Estimate for net income from this segment is pegged at $312 million, down 11.9%.
In its Latin America business, we expect growth across several lines of business within Mexico and Chile, which should drive increased premiums and policy fee income. Positive net flows, primarily from Mexico and Chile should result in an increase in average invested assets and generated higher net investment income. The Zacks Consensus Estimate for net income from this segment is pegged at $149 million, up 22% year over year.
In its EMEA business, we expect to see growth across several European markets and in its accident & health and credit life businesses in Turkey, partially offset by lower premium persistency in its employee benefits business in the Gulf. The Zacks Consensus Estimate for net income from this segment is pegged at $79 million, up 9.7% year over year.
MetLife has been generating enough free cash flow, which it uses for investment purposes and buying back shares. Repurchases made by the company in the fourth quarter will aid its bottom line.
We also expect to see an increase in variable investment income driven by a favorable hedge fund performance and strong private equity. The company’s bottom line will be aided by its expense management initiatives.
Earnings Surprise History
The company boasts an attractive earnings surprise history. It beat estimates in each of the trailing four reported quarters, with an average positive surprise of 9.6%.
MetLife, Inc. Price and EPS Surprise
MetLife, Inc. Price and EPS Surprise | MetLife, Inc. Quote
Here is what our quantitative model predicts:
Our proven model does not conclusively show that MetLife is likely to beat on earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a favorable Zacks Rank #1, 2 or 3 for this to happen. But that is not the case here as you will see below.
Zacks ESP: MetLife has an Earning ESP of -0.15%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: MetLife carries a Zacks Rank #3 (Hold), which increases the predictive power of ESP. However, we need to have a positive ESP to be confident about an earnings surprise.
We caution against Sell-rated stocks (#4 or 5) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks to Consider
Here are some companies from the insurance sector that you may want to consider as these have the right combination of elements to beat on earnings this quarter.
Amerisafe Inc. (AMSF - Free Report) will likely report fourth-quarter 2017 earnings results on Feb 28. The company has an Earnings ESP of +1.61% and a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Unum Group (UNM - Free Report) has an Earnings ESP of +0.83% and a Zacks Rank of 2. The company is expected to report fourth-quarter earnings results on Jan 31.
Trupanion, Inc. (TRUP - Free Report) has an Earnings ESP of +100%. This Zacks #2 Ranked company is expected to report fourth-quarter earnings results on Feb 13.
Zacks Top 10 Stocks for 2018
In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-hold tickers for the entirety of 2018?
Last year's 2017 Zacks Top 10 Stocks portfolio produced double-digit winners, including FMC Corp. and VMware which racked up stellar gains of +67.9% and +61%. Now a brand-new portfolio has been handpicked from over 4,000 companies covered by the Zacks Rank. Don’t miss your chance to get in on these long-term buys.
Access Zacks Top 10 Stocks for 2018 today >>