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Manulife (MFC) Down 10.6% Since Last Earnings Report: Can It Rebound?
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It has been about a month since the last earnings report for Manulife Financial (MFC - Free Report) . Shares have lost about 10.6% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Manulife due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Manulife's Q4 Earnings Beat on Solid WAM Business
Manulife Financial delivered fourth-quarter 2021 core earnings of 67 cents per share, which beat the Zacks Consensus Estimate by 3.1%. The bottom line improved 17.5% year over year.
Core earnings of $1.3 billion (C$1.7 billion) increased 8.3% from the prior-year quarter. This upside was driven by the recognition of core investment gains in 2021, higher net fee income from higher average assets under management and administration (AUMA) in Global Wealth and Asset Management, higher new business gains in the United States and Canada as well as a decrease in Corporate and Other core losses. It was partially offset by lower net gains on seed money investments in new segregated and mutual funds and in-force business growth in Asia and Canada. These items were partially offset by unfavorable policyholder experience.
New business value (NBV) in the reported quarter was $440 million (C$555 million), up 17.3% year over year due to higher business in Asia, Canada and the United States.
Annualized premium equivalent (APE) sales were $1.1 billion (C$1.4 billion).
The expense efficiency ratio improved 370 basis points (bps) to 49%. As of Dec 31, 2021, Manulife Financial’s financial leverage ratio improved 80 bps year over year to 25.8%.
Wealth and asset management assets under management and administration were $855.9 billion, up 13.6% year over year. Wealth and Asset Management business generated a net inflow of $8.1 billion, up nearly three-fold year over year.
Core return on equity, measuring the company’s profitability, expanded 210 bps year over year to 13% in 2021.
Life Insurance Capital Adequacy Test (LICAT) ratio was 142% as of Dec 31, 2021, down from 149% as of Dec 31, 2020.
Book value per share excluding AOCI increased 10.9% to $24.12 as of Dec 31, 2021.
Segmental Performance
Global Wealth and Asset Management division’s core earnings came in at $307 million (C$387 million), up 31.7% year over year.
Asia division’s core earnings totaled $434 million (C$547 million), down 0.9% year over year. In Asia, NBV increased 11% to $391 million. The increase was due to higher sales volumes, favorable interest rates and expense management in Hong Kong, and favorable product mix in Asia Other. The upside was partially offset by lower sales in Japan and lower Critical Illness sales in mainland China. APE sales decreased 6% as growth in Hong Kong was more than offset by lower COLI product sales in Japan.
Manulife Financial’s Canada division core earnings of $227 million (C$286 million) were down 6.2% year over year. NBV increased 26% year over year to $82 million, primarily due to higher margins in annuities and higher volumes in individual insurance. APE sales increased 20%, primarily driven by increased customer demand for its lower-risk segregated fund products and higher individual insurance sales.
The U.S. division reported core earnings of $370 million (C$467 million), up 0.5% year over year. NBV increased 51% year over year to $82 million, primarily driven by higher sales volumes and favorable product mix, notably due to higher international sales. APE sales increased 41% due to strong international sales, which is reported as part of the U.S. segment results, and differentiated domestic product offerings, which include the John Hancock Vitality feature and higher customer demand for insurance protection in the current COVID-19 environment of greater consumer interest in improving baseline health.
Loss at Corporate and Other was $63 million (C$79 million), narrower than the year-ago loss of $150 million.
Capital Deployment
Manulife Financial progressed capital deployment priorities by investing in the highest potential businesses, including the exclusive bancassurance transaction in Vietnam. It also increased the dividend by 18%. In 2022, the insurer will be buying back shares to generate shareholder value and to neutralize the dilution impact on core EPS from the highly successful U.S. VA transaction.
How Have Estimates Been Moving Since Then?
It turns out, estimates review flatlined during the past month.
VGM Scores
At this time, Manulife has an average Growth Score of C, however its Momentum Score is doing a bit 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.
Outlook
Manulife has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Manulife (MFC) Down 10.6% Since Last Earnings Report: Can It Rebound?
It has been about a month since the last earnings report for Manulife Financial (MFC - Free Report) . Shares have lost about 10.6% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Manulife due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Manulife's Q4 Earnings Beat on Solid WAM Business
Manulife Financial delivered fourth-quarter 2021 core earnings of 67 cents per share, which beat the Zacks Consensus Estimate by 3.1%. The bottom line improved 17.5% year over year.
Core earnings of $1.3 billion (C$1.7 billion) increased 8.3% from the prior-year quarter. This upside was driven by the recognition of core investment gains in 2021, higher net fee income from higher average assets under management and administration (AUMA) in Global Wealth and Asset Management, higher new business gains in the United States and Canada as well as a decrease in Corporate and Other core losses. It was partially offset by lower net gains on seed money investments in new segregated and mutual funds and in-force business growth in Asia and Canada. These items were partially offset by unfavorable policyholder experience.
New business value (NBV) in the reported quarter was $440 million (C$555 million), up 17.3% year over year due to higher business in Asia, Canada and the United States.
Annualized premium equivalent (APE) sales were $1.1 billion (C$1.4 billion).
The expense efficiency ratio improved 370 basis points (bps) to 49%.
As of Dec 31, 2021, Manulife Financial’s financial leverage ratio improved 80 bps year over year to 25.8%.
Wealth and asset management assets under management and administration were $855.9 billion, up 13.6% year over year. Wealth and Asset Management business generated a net inflow of $8.1 billion, up nearly three-fold year over year.
Core return on equity, measuring the company’s profitability, expanded 210 bps year over year to 13% in 2021.
Life Insurance Capital Adequacy Test (LICAT) ratio was 142% as of Dec 31, 2021, down from 149% as of Dec 31, 2020.
Book value per share excluding AOCI increased 10.9% to $24.12 as of Dec 31, 2021.
Segmental Performance
Global Wealth and Asset Management division’s core earnings came in at $307 million (C$387 million), up 31.7% year over year.
Asia division’s core earnings totaled $434 million (C$547 million), down 0.9% year over year. In Asia, NBV increased 11% to $391 million. The increase was due to higher sales volumes, favorable interest rates and expense management in Hong Kong, and favorable product mix in Asia Other. The upside was partially offset by lower sales in Japan and lower Critical Illness sales in mainland China. APE sales decreased 6% as growth in Hong Kong was more than offset by lower COLI product sales in Japan.
Manulife Financial’s Canada division core earnings of $227 million (C$286 million) were down 6.2% year over year. NBV increased 26% year over year to $82 million, primarily due to higher margins in annuities and higher volumes in individual insurance. APE sales increased 20%, primarily driven by increased customer demand for its lower-risk segregated fund products and higher individual insurance sales.
The U.S. division reported core earnings of $370 million (C$467 million), up 0.5% year over year. NBV increased 51% year over year to $82 million, primarily driven by higher sales volumes and favorable product mix, notably due to higher international sales. APE sales increased 41% due to strong international sales, which is reported as part of the U.S. segment results, and differentiated domestic product offerings, which include the John Hancock Vitality feature and higher customer demand for insurance protection in the current COVID-19 environment of greater consumer interest in improving baseline health.
Loss at Corporate and Other was $63 million (C$79 million), narrower than the year-ago loss of $150 million.
Capital Deployment
Manulife Financial progressed capital deployment priorities by investing in the highest potential businesses, including the exclusive bancassurance transaction in Vietnam. It also increased the dividend by 18%. In 2022, the insurer will be buying back shares to generate shareholder value and to neutralize the dilution impact on core EPS from the highly successful U.S. VA transaction.
How Have Estimates Been Moving Since Then?
It turns out, estimates review flatlined during the past month.
VGM Scores
At this time, Manulife has an average Growth Score of C, however its Momentum Score is doing a bit 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.
Outlook
Manulife has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.