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Why Is MetLife (MET) Up 1.6% Since Last Earnings Report?

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A month has gone by since the last earnings report for MetLife (MET - Free Report) . Shares have added about 1.6% 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 the most recent earnings report in order to get a better handle on the important catalysts.

MetLife Q2 Earnings Beat on Strong Latin America Unit

MetLife reported second-quarter 2022 adjusted operating earnings of $2 per share, which outpaced the Zacks Consensus Estimate by 29%. However, the bottom line declined 16% year over year.

Adjusted operating revenues of MetLife amounted to $18,298 million, which increased from $16,239 million in the year-ago quarter. The top line surpassed the consensus mark by 10.7%.

The better-than-expected second-quarter results were driven by higher premiums, fees and other revenues, solid contributions from the Latin America segment and reduced expenses. However, the upside was partly offset by a lower net investment income.

Recession worries, ongoing geopolitical turmoil and interest rate increases by authorities are affecting equity markets. This is holding the investment income back from growing to its true potential.

Behind the Headlines

Adjusted premiums, fees and other revenues, excluding pension risk transfer (PRT), were $11,230 million, which inched up 1% year over year. Adjusted net investment income fell 12% year over year to $4,504 million in the quarter under review, primarily due to reduced variable investment income, stemming from decreased private equity returns.

Total expenses of $15,558 million decreased from $14,037 million a year ago, due to lower interest credited to policyholder account balances and policyholder dividends. The adjusted expense ratio, excluding total notable items related to adjusted other expenses and PRT, increased 20 basis points (bps) year over year to 19.4%.

Net income dropped 97% year over year to $103 million. Adjusted return on equity, excluding AOCI other than FCTA, deteriorated 320 bps year over year to 14.3%.

Segmental Performances

U.S.: The segment reported adjusted earnings of $788 million, which plunged 13% year over year in the second quarter due to reduced variable investment income. However, it beat the Zacks Consensus Estimate of $649 million on favorable underwriting and volume growth. Adjusted premiums, fees and other revenues, excluding PRT of $6,379 million, climbed 4% year over year.

Asia: Adjusted earnings in the segment amounted to $386 million, which fell 26% year over year in the quarter under review and missed the consensus mark of $388.5 million, due to reduced variable investment income and unfavorable underwriting. This was partially offset by volume growth. Adjusted premiums, fees & other revenues declined 6% year over year to $1,917 million in the second quarter.

Latin America: Adjusted earnings of $267 million increased nearly three-fold year over year and beat the Zacks Consensus Estimate of $135.3 million, due to lower claims regarding COVID-19, volume growth and increased investment margins stemming from the inflation in Chile. Adjusted premiums, fees & other revenues advanced 21% or 26% on a cc basis year over year to $1,132 million in the segment, due to growing sales.

EMEA: The segment’s adjusted earnings were $64 million, which plunged 32% year over year in the second quarter, but beat the consensus mark of $61.9 million. At cc, adjusted earnings fell 16% year over year due to equity market impacts. Adjusted premiums, fees & other revenues of $586 million declined 21% year over year, while the same on a cc basis slid 12% year over year due to divestments.

MetLife Holdings: Adjusted earnings in the segment slumped 32% year over year to $364 million, due to decreased variable investment income. However, the reported figure beat the Zacks Consensus Estimate of $206 million. Adjusted premiums, fees & other revenues fell 5% year over year to $1,122 million in the quarter under review.

Corporate & Other: Adjusted loss of $243 million widened from the prior-year quarter’s loss of $60 million.

Financial Update (as of Jun 30, 2022)

MetLife exited the second quarter with cash and cash equivalents of $20,548 million, which marginally increased from $20,047 million at 2021-end. Total assets of $662.9 billion declined from $759.7 billion at the fourth quarter-end.

Long-term debt totaled $13,677 million, down from $13,933 million at 2021-end. It also had short-term debt of $196 million. Total equity of $37,367 million decreased from $67,749 million at 2021-end.

Capital Deployment Update

MetLife bought back shares worth $1.1 billion during the second quarter.

How Have Estimates Been Moving Since Then?

It turns out, estimates revision flatlined during the past month.

VGM Scores

Currently, MetLife has a subpar Growth Score of D, however its Momentum Score is doing a bit better with a C. However, 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

MetLife has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

Performance of an Industry Player

MetLife belongs to the Zacks Insurance - Multi line industry. Another stock from the same industry, CNO Financial (CNO - Free Report) , has gained 0.6% over the past month. More than a month has passed since the company reported results for the quarter ended June 2022.

CNO reported revenues of $855 million in the last reported quarter, representing a year-over-year change of -20.3%. EPS of $0.85 for the same period compares with $0.66 a year ago.

For the current quarter, CNO is expected to post earnings of $0.45 per share, indicating a change of -37.5% from the year-ago quarter. The Zacks Consensus Estimate remained unchanged over the last 30 days.

CNO has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of B.


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