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Why Should You Add Manulife (MFC) Stock to Your Portfolio?
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Manulife Financial Corporation’s (MFC - Free Report) strong Asia business, expanding wealth and asset management business and solid capital position along with favorable growth estimates make it worthy of adding to one’s portfolio.
The life insurer has a decent track record of delivering earnings surprise in two of the last four reported quarters while missing in the other two.
Zacks Rank and Price Performance
Manulife currently carries a Zacks Rank #2 (Buy). In the past six months, the stock has gained 17.5%, outperforming the industry’s increase of 14.1%.
Image Source: Zacks Investment Research
Return on Equity
Manulife’s ROE for the trailing 12 months is 13.1%, better than the industry average of 12.2%. This reflects Manulife’s efficiency in utilizing shareholders’ fund. The company targets 13% ROE over the medium term.
Why is it Worth Adding the Stock?
The Zacks Consensus Estimate for 2023 earnings is pegged at $2.4, indicating an increase of 0.8% from the year-ago reported figure while that for 2024 is pegged at $2.63, indicating an upside of 9.3% from the year-ago reported figure. The long-term earnings growth rate is currently pegged at 10%.
Manulife targets core EPS growth between 10% and 12% over the medium term.
The Zacks Consensus Estimate for MFC’s 2023 and 2024 earnings has moved 1.3% and 1.5% north, respectively in the past 30 days, reflecting analyst optimism.
Manulife, one of the three dominant life insurers in Canada, is continually growing its Asia business that contributes significantly to its earnings. This apart, MFC is also expanding the Wealth and Asset Management business and has identified Europe (and the wider EMEA market) as a significant growth area and is making long-term investments in this region. The life insurer remains focused on accelerating growth in the highest potential businesses and targets two-third of core earnings from these businesses.
Manulife is consistently expanding its Wealth and Asset Management business around the world that in turn has been driving its core earnings growth.
Manulife has an impressive inorganic growth story. Strategic acquisitions also reflect the prudent use of capital in high-growth, less capital-intensive, higher-return businesses. Banking on solid financial position, Manulife is well poised to ramp up its inorganic growth profile.
In tandem with the industry trend, MFC invested $1 billion since 2018 to enhance our digital capabilities.
Manulife boasts a strong capital position. Manulife’s dividend has increased at a six-year CAGR of 10%. Its board also approved an 11% increase in dividends for 2023. It targets a 35-45% dividend payout over the medium term. It also bought back $1.9 billion worth of shares in 2022. MFC targets a leverage ratio of 25% and 30-40% dividend payout over the medium term.
Manulife has a Value Score of B. Back-tested results have shown that stocks with a Value Score of A or B combined with a Zacks Rank #1 (Strong Buy) or #2 offers better returns.
Image: Bigstock
Why Should You Add Manulife (MFC) Stock to Your Portfolio?
Manulife Financial Corporation’s (MFC - Free Report) strong Asia business, expanding wealth and asset management business and solid capital position along with favorable growth estimates make it worthy of adding to one’s portfolio.
The life insurer has a decent track record of delivering earnings surprise in two of the last four reported quarters while missing in the other two.
Zacks Rank and Price Performance
Manulife currently carries a Zacks Rank #2 (Buy). In the past six months, the stock has gained 17.5%, outperforming the industry’s increase of 14.1%.
Image Source: Zacks Investment Research
Return on Equity
Manulife’s ROE for the trailing 12 months is 13.1%, better than the industry average of 12.2%. This reflects Manulife’s efficiency in utilizing shareholders’ fund. The company targets 13% ROE over the medium term.
Why is it Worth Adding the Stock?
The Zacks Consensus Estimate for 2023 earnings is pegged at $2.4, indicating an increase of 0.8% from the year-ago reported figure while that for 2024 is pegged at $2.63, indicating an upside of 9.3% from the year-ago reported figure. The long-term earnings growth rate is currently pegged at 10%.
Manulife targets core EPS growth between 10% and 12% over the medium term.
The Zacks Consensus Estimate for MFC’s 2023 and 2024 earnings has moved 1.3% and 1.5% north, respectively in the past 30 days, reflecting analyst optimism.
Manulife, one of the three dominant life insurers in Canada, is continually growing its Asia business that contributes significantly to its earnings. This apart, MFC is also expanding the Wealth and Asset Management business and has identified Europe (and the wider EMEA market) as a significant growth area and is making long-term investments in this region. The life insurer remains focused on accelerating growth in the highest potential businesses and targets two-third of core earnings from these businesses.
Manulife is consistently expanding its Wealth and Asset Management business around the world that in turn has been driving its core earnings growth.
Manulife has an impressive inorganic growth story. Strategic acquisitions also reflect the prudent use of capital in high-growth, less capital-intensive, higher-return businesses. Banking on solid financial position, Manulife is well poised to ramp up its inorganic growth profile.
In tandem with the industry trend, MFC invested $1 billion since 2018 to enhance our digital capabilities.
Manulife boasts a strong capital position. Manulife’s dividend has increased at a six-year CAGR of 10%. Its board also approved an 11% increase in dividends for 2023. It targets a 35-45% dividend payout over the medium term. It also bought back $1.9 billion worth of shares in 2022. MFC targets a leverage ratio of 25% and 30-40% dividend payout over the medium term.
Manulife has a Value Score of B. Back-tested results have shown that stocks with a Value Score of A or B combined with a Zacks Rank #1 (Strong Buy) or #2 offers better returns.
Other Stocks to Consider
Some other top-ranked stocks from the insurance industry are Voya Financial (VOYA - Free Report) , Brighthouse Financial (BHF - Free Report) and Primerica (PRI - Free Report) , each carrying a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Voya Financial’s earnings surpassed the Zacks Consensus Estimate in each of the last four quarters, the average earnings surprise being 38.68%.
The Zacks Consensus Estimate for VOYA’s 2023 and 2024 earnings per share indicates year-over-year increases of 6.1% and 14%, respectively.
Brighthouse Financial’s earnings surpassed the Zacks Consensus Estimate in three of the last four quarters, the average beat being 2.07%.
The Zacks Consensus Estimate for BHF’s 2023 and 2024 earnings per share indicates year-over-year increases of 29.4% and 12.6%, respectively.
Primerica’s earnings surpassed the Zacks Consensus Estimate in two of the last four quarters.
The Zacks Consensus Estimate for PRI’s 2023 and 2024 earnings per share indicates year-over-year increases of 18.3% and 8.9%, respectively.