A month has gone by since the last earnings report for MetLife (MET - Free Report) . Shares have added about 3.3% 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 its most recent earnings report in order to get a better handle on the important drivers.
MetLife Q2 Earnings Fall Shy Of Estimates, Tumble Y/Y
MetLife’s second-quarter 2020 operating earnings of 83 cents per share missed the Zacks Consensus Estimate by 13.5% and also declined 39.9% year over year. The company’s results were negatively impacted by lower revenues.
Behind the Headlines
The company’s operating revenues of $13.8 billion were down 15.9% year over year and also missed the Zacks Consensus Estimate by 9.9%. Adjusted premiums, fees & other revenues excluding pension risk transfer were down 8% year over year to $10.5 billion.
Net investment income (adjusted) of $3.4 billion was down 24% year over year due to loss in variable investment income.
Total expenses of $13.9 million were down 8.5% year over year. Adjusted expense ratio of 20.6% was up 60 basis points year over year. Adjusted book value per share was $52.27, up 11% year over year. Adjusted return on equity was 6.4%, down 570 basis points year over year.
Quarterly Segment Details
Adjusted earnings in this segment declined 29% year over year to $523 million due to lower variable investment income. Adjusted premiums, fees & other revenues were $5.7 billion, down 15% year over year due to weak contributions from Group Benefits, Property & Casualty, and Retirement and Income Solution sub-segment.
Operating earnings of $256 million were down 29% year over year due to a decline in variable investment income. However, the same was partly offset by higher volume and expense margins. Adjusted premiums, fees & other revenues were $2 billion, down 3% on constant-currency basis.
Operating earnings of $132 million were down 17% year over year due to adverse foreign exchange rates. Adjusted premiums, fees & other revenues were $737 million, down 31% due to soft annuity sales in Chile.
Operating earnings from EMEA surged 51% year over year to $116 million, primarily driven by favourable underwriting and expense margins. Adjusted premiums, fees & other revenues of $660 million inched up 2% year over year on constant-currency basis.
Adjusted operating earnings from MetLife Holdings came in at $20 million, down 93% year over year due to lower variable investment income along with unfavourable underwriting margins. Operating premiums, fees & other revenues were $1.2 billion, down 5% year over year.
Corporate & Other
The segment’s adjusted loss of $289 million in the second quarter was narrower than the adjusted loss of $307 million in the prior-year quarter.
As of Jun 30, 2020, shareholders’ equity was $64 billion, down 3.5% from the level at 2019 end. Long-term debt as of the second-quarter end was $13.3 billion, down 0.9% from the level at 2019 end.
Cash and cash equivalents of $18 billion as of Jun 30, 2020 were up 11.1% from the level at 2019 end.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision flatlined during the past month. The consensus estimate has shifted 5.85% due to these changes.
Currently, MetLife has a poor Growth Score of F, however its Momentum Score is doing a lot better with a B. Charting a somewhat similar path, the stock was allocated a grade of A on the value side, putting it in the top quintile 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.
MetLife has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.