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Here's Why You Should Retain MetLife (MET) in Your Portfolio

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MetLife, Inc. (MET - Free Report) is well-poised to grow on the back of rising premiums, volume growth and improving contributions from the U.S. and Latin America businesses.

MetLife continues to benefit from its strategic acquisitions, which are boosting its footprint in the insurance space. The company’s cost-saving initiatives are also aiding its margins. MetLife is an insurance-based global financial services company offering protection and investment products to individual and institutional customers.

Zacks Rank & Price Performance

MET currently carries a Zacks Rank #3 (Hold). Its shares have lost 8.9% in the past six months compared with the industry’s decline of 2%.


Zacks Investment Research
Image Source: Zacks Investment Research


Optimistic Growth Projections

The Zacks Consensus Estimate for MET’s 2023 earnings is pegged at $8.29 per share, indicating a 21% increase from the year-ago reported figure. The same for 2024 earnings is pegged at $9.07 per share, suggesting a 9.4% increase from the year-ago reported figure.

Decent Surprise History

The company beat earnings estimates in three of the past four quarters and missed on the other occasion, the average surprise being 12.1%.

Return on Equity (ROE)

Return on equity, a measure reflecting how efficiently a company utilizes shareholders’ money, was 15.6% in the trailing 12 months, better than the industry average of 8.9%.

Key Drivers

In 2022, a significant portion of MET’s total revenues came from the U.S. segment, which improved 23.5% from 2021. Therefore, the company is putting efforts to grow the segment further. MET offers a diversified set of products under this segment and aims to meet employer and customer expectations by investing in the carrier. MET’s large-scale business enables it to add products and capabilities to enhance customer experience.

The company continues to demonstrate its commitment to better execute the Next Horizon strategy. Under this strategy, it is supposed to generate strong free cash flows, streamline business operations, and differentiate its products through innovation, scale, brand and talent.

MET’s Latin America segment continued its growth trajectory, delivering strong top and bottom-line results. Improving awareness about its products and better quality should continue to drive growth of this segment in the future.

MetLife undertakes various growth-related initiatives via strategic acquisitions. In 2022, MET completed the sale of its wholly-owned subsidiaries in Poland and Greece. Strategic steps like this will help the company achieve higher profitability and add value to shareholders’ funds.

Recently, MetLife’s asset management arm acquired Raven Capital, adding $2.1 billion to its assets under management. This acquisition will help MET strengthen its market position and expand its offerings in private credit investments.

MetLife’s investment management arm is responsible for purchasing assets to match its liabilities well. The company considers its asset-liability management and diversified investment portfolio to be key differentiators. MET is also one of the largest originators of commercial and agricultural mortgages in the United States.

MET has worked on its organic and inorganic growth fronts, and on expenses to improve profitability. It deployed $3.8 billion to enhance its organic business in 2022.

MET generated strong free cash flows in 2022, which will help exceed the five-year target of $20 billion. The company also delivered operational efficiency by maintaining its full-year direct expense ratio of 12.2%.

The company returned $4.9 billion to its shareholders through dividends and share buybacks in 2022. It repurchased $250 million of common stock in January 2023. MET also pays a regular quarterly dividend, making it an attractive pick for yield-seeking investors.

Key Concern

The company’s declining investment income and struggling Europe, the Middle East and Africa (EMEA) segment are concerning. A softer investment income is hurting MET’s margins. The EMEA segment’s results are being impacted by weaker equity markets. Nevertheless, we believe that a systematic and strategic plan of action will drive growth in the long term.

Stocks to Consider

Some better-ranked stocks from the Multi line insurance space are Goosehead Insurance, Inc (GSHD - Free Report) , Old Republic International Corporation (ORI - Free Report) and Oscar Health, Inc. (OSCR - Free Report) . Goosehead and Old Republic International currently sport a Zacks Rank #1 (Strong Buy), while Oscar Health carries a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Goosehead Insurance’s bottom line outpaced estimates in two of the trailing four quarters and missed the other two. The average earnings surprise is 79.8%.

The Zacks Consensus Estimate for GSHD’s 2023 earnings indicates a 67.3% rise, while the same for revenues suggests 26.6% growth from the prior-year reported figures.

The bottom line of Old Republic International outpaced the Zacks Consensus Estimate in three of the trailing four quarters, while it missed in one, the average surprise being 21.9%. The consensus mark for ORI’s 2023 earnings has moved 7.3% north in the past 60 days.

Oscar Health’s bottom line outpaced estimates in two of the trailing four quarters and missed the other two. The average earnings surprise is 3.4%.

The Zacks Consensus Estimate for OSCR’s 2023 revenues indicates a 32.7% rise from the prior-year reported figure.

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