We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
MetLife (MET) Down 0.5% Since Last Earnings Report: Can It Rebound?
Read MoreHide Full Article
A month has gone by since the last earnings report for MetLife (MET - Free Report) . Shares have lost about 0.5% in that time frame, outperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is MetLife due for a breakout? 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 catalysts.
MetLife Q4 Earnings Miss on Lower Investment Income
MetLife reported fourth-quarter 2022 adjusted operating earnings of $1.55 per share, which missed the Zacks Consensus Estimate of $1.74 and our estimate of $1.77. The bottom line declined 29% year over year.
Adjusted operating revenues of MetLife amounted to $15,836 million, which decreased 21.6% year over year. The top line missed the consensus mark of $16,996 million and our estimate of $16,303.1 million.
The weak fourth-quarter results were caused by reduced private equity returns. Lower investment income affected important metrics despite a rising interest rate environment. Reduced profit levels from Asia and MetLife Holdings businesses were concerning. The negatives were partially offset by lower expenses, volume growth across some segments and improved contributions from the U.S. and Latin America businesses.
2022 Performance
MetLife generated adjusted operating revenues of $75.5 billion in 2022, up from $70.2 billion in 2021. Adjusted earnings per share of $6.85 fell 25% from the 2021 levels. Adjusted net investment income of $18.2 billion declined from $21.3 billion in 2021.
Behind the Headlines
Adjusted premiums, fees and other revenues, excluding pension risk transfer (PRT), were $11,375 million, down 1% year over year. Adjusted net investment income fell 13% year over year to $4,530 million in the quarter under review, primarily due to reduced variable investment income stemming from decreased private equity returns.
Total expenses of $14,589 million decreased from $18,783 million a year ago, due to lower policyholder benefits and claims. The adjusted expense ratio, excluding total notable items related to adjusted other expenses and PRT, increased 30 basis points (bps) year over year to 20.7%.
Net income increased 12% year over year to $1,314 million, due to net derivative and investment gains. Adjusted return on equity, excluding AOCI other than FCTA, deteriorated 400 bps year over year to 11.3%.
Segmental Performances
U.S.: The segment reported adjusted earnings of $771 million, which increased 20% year over year in the fourth quarter due to higher volume and favorable underwriting, partly offset by reduced variable investment income. Also, it beat the Zacks Consensus Estimate by 3.9%. Adjusted premiums, fees and other revenues, excluding PRT of $6,735 million, rose 3% year over year.
Asia: Adjusted earnings in the segment amounted to $215 million, which fell 63% year over year in the quarter under review and missed the consensus mark of $363.7 million, due to reduced variable investment income. Adjusted premiums, fees & other revenues declined 12% year over year to $1,770 million in the fourth quarter.
Latin America: Adjusted earnings of $181 million increased 45% from a year ago and beat the Zacks Consensus Estimate by 13.1%, due to volume growth, favorable underwriting and increased investment margins, partially offset by reduced variable investment income. Adjusted premiums, fees & other revenues advanced 20% on a cc basis year over year to $1,154 million in the segment, due to growing sales.
EMEA: The segment’s adjusted earnings were $70 million, which surged 67% at reported basis and 112% at cc basis year over year in the fourth quarter, and beat the consensus mark by 16.1%. Favorable underwriting benefited the segment. Adjusted premiums, fees & other revenues of $562 million declined 10% year over year. On a cc basis, the same was up 2% year over year due to sales growth.
MetLife Holdings: Adjusted earnings in the segment slumped 57% year over year to $208 million due to decreased variable investment income. The reported figure also missed the Zacks Consensus Estimate by 18.8%. Adjusted premiums, fees & other revenues fell 13% year over year to $1,051 million in the quarter under review.
Corporate & Other: Adjusted loss of $219 million widened from the prior-year quarter’s loss of $37 million.
Financial Update (as of Dec 31, 2022)
MetLife exited the fourth quarter with cash and cash equivalents of $20,195 million, which increased from $20,047 million at 2021-end. Total assets of $666.6 billion declined from $759.7 billion in fourth-quarter 2021 end.
Long-term debt totaled $14,647 million, up from $13,933 million at 2021-end. It also had a short-term debt of $175 million. Total equity of $27,287 million decreased from $67,749 million at 2021-end.
Capital Deployment Update
MetLife bought back shares worth $596 million during the fourth quarter.
Outlook
MetLife expects pre-tax variable investment income to be around $2 billion for 2023. Corporate & Other adjusted losses are expected within $650-$750 million for the year. The effective tax rate is likely to be in the range of 22-24%.
MET expects its MetLife Holdings’ adjusted premiums, fees and other revenues to decline 12-14% in 2023 and then by 6-8% per annum. It expects to generate adjusted earnings of $1-$1.2 billion in 2023 from this segment.
Within three years, the company targets adjusted return on equity within 13-15%. It intends to keep free cash flows within the 65-75% range of adjusted earnings. Further, the company is aiming at a direct expense ratio of 12.6%. In the near term, MET expects its group benefits’ adjusted premiums, fees and other revenues to grow 4-6% per annum.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended upward during the past month.
VGM Scores
Currently, MetLife has a subpar Growth Score of D, however its Momentum Score is doing a lot better with an A. Following the exact same course, 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 A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, MetLife has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
MetLife (MET) Down 0.5% Since Last Earnings Report: Can It Rebound?
A month has gone by since the last earnings report for MetLife (MET - Free Report) . Shares have lost about 0.5% in that time frame, outperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is MetLife due for a breakout? 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 catalysts.
MetLife Q4 Earnings Miss on Lower Investment Income
MetLife reported fourth-quarter 2022 adjusted operating earnings of $1.55 per share, which missed the Zacks Consensus Estimate of $1.74 and our estimate of $1.77. The bottom line declined 29% year over year.
Adjusted operating revenues of MetLife amounted to $15,836 million, which decreased 21.6% year over year. The top line missed the consensus mark of $16,996 million and our estimate of $16,303.1 million.
The weak fourth-quarter results were caused by reduced private equity returns. Lower investment income affected important metrics despite a rising interest rate environment. Reduced profit levels from Asia and MetLife Holdings businesses were concerning. The negatives were partially offset by lower expenses, volume growth across some segments and improved contributions from the U.S. and Latin America businesses.
2022 Performance
MetLife generated adjusted operating revenues of $75.5 billion in 2022, up from $70.2 billion in 2021. Adjusted earnings per share of $6.85 fell 25% from the 2021 levels. Adjusted net investment income of $18.2 billion declined from $21.3 billion in 2021.
Behind the Headlines
Adjusted premiums, fees and other revenues, excluding pension risk transfer (PRT), were $11,375 million, down 1% year over year. Adjusted net investment income fell 13% year over year to $4,530 million in the quarter under review, primarily due to reduced variable investment income stemming from decreased private equity returns.
Total expenses of $14,589 million decreased from $18,783 million a year ago, due to lower policyholder benefits and claims. The adjusted expense ratio, excluding total notable items related to adjusted other expenses and PRT, increased 30 basis points (bps) year over year to 20.7%.
Net income increased 12% year over year to $1,314 million, due to net derivative and investment gains. Adjusted return on equity, excluding AOCI other than FCTA, deteriorated 400 bps year over year to 11.3%.
Segmental Performances
U.S.: The segment reported adjusted earnings of $771 million, which increased 20% year over year in the fourth quarter due to higher volume and favorable underwriting, partly offset by reduced variable investment income. Also, it beat the Zacks Consensus Estimate by 3.9%. Adjusted premiums, fees and other revenues, excluding PRT of $6,735 million, rose 3% year over year.
Asia: Adjusted earnings in the segment amounted to $215 million, which fell 63% year over year in the quarter under review and missed the consensus mark of $363.7 million, due to reduced variable investment income. Adjusted premiums, fees & other revenues declined 12% year over year to $1,770 million in the fourth quarter.
Latin America: Adjusted earnings of $181 million increased 45% from a year ago and beat the Zacks Consensus Estimate by 13.1%, due to volume growth, favorable underwriting and increased investment margins, partially offset by reduced variable investment income. Adjusted premiums, fees & other revenues advanced 20% on a cc basis year over year to $1,154 million in the segment, due to growing sales.
EMEA: The segment’s adjusted earnings were $70 million, which surged 67% at reported basis and 112% at cc basis year over year in the fourth quarter, and beat the consensus mark by 16.1%. Favorable underwriting benefited the segment. Adjusted premiums, fees & other revenues of $562 million declined 10% year over year. On a cc basis, the same was up 2% year over year due to sales growth.
MetLife Holdings: Adjusted earnings in the segment slumped 57% year over year to $208 million due to decreased variable investment income. The reported figure also missed the Zacks Consensus Estimate by 18.8%. Adjusted premiums, fees & other revenues fell 13% year over year to $1,051 million in the quarter under review.
Corporate & Other: Adjusted loss of $219 million widened from the prior-year quarter’s loss of $37 million.
Financial Update (as of Dec 31, 2022)
MetLife exited the fourth quarter with cash and cash equivalents of $20,195 million, which increased from $20,047 million at 2021-end. Total assets of $666.6 billion declined from $759.7 billion in fourth-quarter 2021 end.
Long-term debt totaled $14,647 million, up from $13,933 million at 2021-end. It also had a short-term debt of $175 million. Total equity of $27,287 million decreased from $67,749 million at 2021-end.
Capital Deployment Update
MetLife bought back shares worth $596 million during the fourth quarter.
Outlook
MetLife expects pre-tax variable investment income to be around $2 billion for 2023. Corporate & Other adjusted losses are expected within $650-$750 million for the year. The effective tax rate is likely to be in the range of 22-24%.
MET expects its MetLife Holdings’ adjusted premiums, fees and other revenues to decline 12-14% in 2023 and then by 6-8% per annum. It expects to generate adjusted earnings of $1-$1.2 billion in 2023 from this segment.
Within three years, the company targets adjusted return on equity within 13-15%. It intends to keep free cash flows within the 65-75% range of adjusted earnings. Further, the company is aiming at a direct expense ratio of 12.6%. In the near term, MET expects its group benefits’ adjusted premiums, fees and other revenues to grow 4-6% per annum.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended upward during the past month.
VGM Scores
Currently, MetLife has a subpar Growth Score of D, however its Momentum Score is doing a lot better with an A. Following the exact same course, 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 A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, MetLife has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.