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MetLife (MET) to Report Q4 Earnings: What's in the Cards?
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MetLife, Inc. (MET - Free Report) is slated to report fourth-quarter 2020 results on Feb 3, after the market closes.
In the third quarter, MetLife’s bottom line of $1.73 per share outpaced the Zacks Consensus Estimate by 4.9% and improved 36% year over year. The company’s results gained momentum from strong underwriting results, rebounding of variable investment income and stringent cost-control initiatives.
Factors to Note
In the to-be-reported quarter, lower interest rates might have weighed on the company’s investment income.
With regard to MetLife’s segments, the company’s U.S. business is likely to have benefited from strong performance across its Group Benefits and, Retirement and Income Solutions (RIS) subsegments. While higher variable investment income, favorable underwriting margins and volume growth may have provided a boost to RIS, improved dental and disability results are expected to have driven the Group Benefits business in the to-be-reported quarter.
However, in the to-be-reported quarter, management expects the group life mortality ratio to be slightly higher than the company’s annual target range of 85-90%, which is likely to have dented the performance of the Group Benefits business to some extent. As a matter of fact, the fourth quarter, which is usually subject to increased seasonal life claims, has been grappling with higher COVID-19 related claims this time. Notably, increased catastrophe losses are likely to have dented the performance of the Property & Casualty subsegment in the to-be-reported quarter.
In Asia, improved variable investment income, and strong underwriting and expense margins are likely to have benefited the segment in the to-be-reported quarter.
However, soft underwriting results and higher COVID-19 related claims might have hindered growth of the Latin America segment in the to-be-reported quarter.
In the Europe, the Middle East and Africa (EMEA) segment, lower claims and group policies across the region are likely to have resulted in strong underwriting margins. Improved expense margins and robust volumes may have driven its performance in the quarter to be reported.
MetLife’s direct expense ratio, which has been improving since 2015, is expected to remain higher than usual in the to-be-reported quarter. In the quarter under review, the company generally resorts to higher enrolment and other costs before premium receipts in its Group Benefits business. Also, specific corporate initiative costs are likely to have remained elevated in the to-be-reported quarter.
Q4 Estimates
The Zacks Consensus Estimate for the company’s earnings is pegged at $1.52 per share, indicating a decline of 23.2% from the year-ago quarter’s reported figure.
The consensus mark for revenues stands at $15.9 billion, suggesting a slump of 12.2% from the prior-year quarter.
Earnings Surprise History
The company has a decent earnings surprise track. Its bottom line surpassed estimates in the trailing three quarters, the average being 10.43%. This is depicted in the chart below:
Our proven model does not conclusively predict an earnings beat for MetLife this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here.
Earnings ESP: MetLife has an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Some stocks worth considering from the insurance industry with a perfect mix of elements to surpass estimates in the upcoming quarterly releases are as follows:
Sun Life Financial Inc. (SLF - Free Report) has an Earnings ESP of +12.50% and a Zacks Rank #2.
NMI Holdings, Inc. (NMIH - Free Report) has an Earnings ESP of +5.44% and a Zacks Rank of 3 at present.
Cincinnati Financial Corporation (CINF - Free Report) has an Earnings ESP of +2.72% and a Zacks Rank #3, currently.
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MetLife (MET) to Report Q4 Earnings: What's in the Cards?
MetLife, Inc. (MET - Free Report) is slated to report fourth-quarter 2020 results on Feb 3, after the market closes.
In the third quarter, MetLife’s bottom line of $1.73 per share outpaced the Zacks Consensus Estimate by 4.9% and improved 36% year over year. The company’s results gained momentum from strong underwriting results, rebounding of variable investment income and stringent cost-control initiatives.
Factors to Note
In the to-be-reported quarter, lower interest rates might have weighed on the company’s investment income.
With regard to MetLife’s segments, the company’s U.S. business is likely to have benefited from strong performance across its Group Benefits and, Retirement and Income Solutions (RIS) subsegments. While higher variable investment income, favorable underwriting margins and volume growth may have provided a boost to RIS, improved dental and disability results are expected to have driven the Group Benefits business in the to-be-reported quarter.
However, in the to-be-reported quarter, management expects the group life mortality ratio to be slightly higher than the company’s annual target range of 85-90%, which is likely to have dented the performance of the Group Benefits business to some extent. As a matter of fact, the fourth quarter, which is usually subject to increased seasonal life claims, has been grappling with higher COVID-19 related claims this time. Notably, increased catastrophe losses are likely to have dented the performance of the Property & Casualty subsegment in the to-be-reported quarter.
In Asia, improved variable investment income, and strong underwriting and expense margins are likely to have benefited the segment in the to-be-reported quarter.
However, soft underwriting results and higher COVID-19 related claims might have hindered growth of the Latin America segment in the to-be-reported quarter.
In the Europe, the Middle East and Africa (EMEA) segment, lower claims and group policies across the region are likely to have resulted in strong underwriting margins. Improved expense margins and robust volumes may have driven its performance in the quarter to be reported.
MetLife’s direct expense ratio, which has been improving since 2015, is expected to remain higher than usual in the to-be-reported quarter. In the quarter under review, the company generally resorts to higher enrolment and other costs before premium receipts in its Group Benefits business. Also, specific corporate initiative costs are likely to have remained elevated in the to-be-reported quarter.
Q4 Estimates
The Zacks Consensus Estimate for the company’s earnings is pegged at $1.52 per share, indicating a decline of 23.2% from the year-ago quarter’s reported figure.
The consensus mark for revenues stands at $15.9 billion, suggesting a slump of 12.2% from the prior-year quarter.
Earnings Surprise History
The company has a decent earnings surprise track. Its bottom line surpassed estimates in the trailing three quarters, the average being 10.43%. This is depicted in the chart below:
MetLife, Inc. Price and EPS Surprise
MetLife, Inc. price-eps-surprise | MetLife, Inc. Quote
What Our Quantitative Model Predicts
Our proven model does not conclusively predict an earnings beat for MetLife this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here.
Earnings ESP: MetLife has an Earnings ESP of 0.00%. 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. You can see the complete list of today’s Zacks #1 Rank stocks here.
Stocks to Consider
Some stocks worth considering from the insurance industry with a perfect mix of elements to surpass estimates in the upcoming quarterly releases are as follows:
Sun Life Financial Inc. (SLF - Free Report) has an Earnings ESP of +12.50% and a Zacks Rank #2.
NMI Holdings, Inc. (NMIH - Free Report) has an Earnings ESP of +5.44% and a Zacks Rank of 3 at present.
Cincinnati Financial Corporation (CINF - Free Report) has an Earnings ESP of +2.72% and a Zacks Rank #3, currently.
Legal Marijuana: An Investor’s Dream
Imagine getting in early on a young industry primed to skyrocket from $17.7 billion in 2019 to an expected $73.6 billion by 2027.
Although marijuana stocks did better as the pandemic took hold than the market as a whole, they’ve been pushed down. This is exactly the right time to get in on selected strong companies at a fraction of their value before COVID struck. Zacks’ Special Report, Marijuana Moneymakers, reveals 10 exciting tickers for urgent consideration.
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