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MetLife (MET) Stock Rises 11.8% in 3 Months: More Room to Run?
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MetLife, Inc.’s (MET - Free Report) shares have gained 11.8% in the past three months, significantly outperforming the 1.5% growth of the industry, supported by rising investment returns, improving contributions from the U.S. business and strong financials.
Headquartered in New York, MetLife is an insurance-based global financial services company providing protection and investment products to a range of individual and institutional customers. MET currently has a market cap of $47.2 billion.
Image Source: Zacks Investment Research
Can It Retain Momentum?
The answer is yes, thanks to rising estimates, improving operating strength and its cost-curbing initiatives.
The Zacks Consensus Estimate for MetLife’s 2023 earnings per share (EPS) is pegged at $7.78, indicating a 13.6% rise from $6.85 a year ago. Over the past month, it witnessed one upward estimate revision against none in the opposite direction. The company beat earnings estimates in two of the last four quarters and missed the same twice.
MetLife has undertaken several strategies to control costs and increase efficiencies. Our estimate for adjusted total expenses for 2023 indicates a 7.3% year-over-year decline, which will aid its margins. The company’s direct expense ratio was 12.2% for the second quarter, lower than the 2023 target of 12.6%. The consensus estimate for 2023 revenues stands at $70.9 billion.
Despite decreased real estate equity returns, MetLife’s adjusted net investment income is on the rise. The metric jumped 12% year over year to $5,040 million in the second quarter. Earlier, this Zacks Rank #2 (Buy) company stated that it expects pre-tax variable investment income to be around $2 billion for this year.
The company’s strong operations in the United States and Asia position the company for long-term growth. We expect adjusted net income growth from both these businesses to be positive this year, which will support its overall performance. Product introductions in Japan favored the results in Asia in the second quarter.
MET remains in sound financial health, with enough cash and a manageable debt. At the second-quarter end, it had cash and cash equivalents of $15,417 million, significantly higher than its short-term debt of $200 million. Also, it generated free cash flow of $11.9 billion in the trailing 12-month period. With growing operating strength, the figure is expected to rise in the future.
Risks
Despite the upside potential, there are a few factors that can hold back MET’s growth. Unfavorable underwriting margins in the Group Benefits business and declining premiums from MetLife Holdings are some of the headwinds faced by the company lately. Nevertheless, we believe that a systematic and strategic plan of action will drive long-term growth.
Axis Capital has a solid track record of beating earnings estimates in three of the last four quarters and missing in one, the average being 9.75%.
The Zacks Consensus Estimate for AXS’ 2023 and 2024 EPS is pegged at $8.41 and $9.31, indicating a year-over-year increase of 44.7% and 10.7%, respectively.
HCI Group has a solid track record of beating earnings estimates in each of the last four quarters, the average being 448.4%.
The Zacks Consensus Estimate for HCI’s 2023 and 2024 EPS is pegged at $3.25 and $4.35, indicating a year-over-year increase of 159.3% and 33.9%, respectively.
Cincinnati Financial has a solid track record of beating earnings estimates in three of the last four quarters and missing in one, the average being 25.25%. Year to date, CINF has gained 2.7%.
The Zacks Consensus Estimate for CINF’s 2023 and 2024 EPS is pegged at $5 and $5.88, indicating a year-over-year increase of 17.9% and 17.6%, respectively.
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MetLife (MET) Stock Rises 11.8% in 3 Months: More Room to Run?
MetLife, Inc.’s (MET - Free Report) shares have gained 11.8% in the past three months, significantly outperforming the 1.5% growth of the industry, supported by rising investment returns, improving contributions from the U.S. business and strong financials.
Headquartered in New York, MetLife is an insurance-based global financial services company providing protection and investment products to a range of individual and institutional customers. MET currently has a market cap of $47.2 billion.
Image Source: Zacks Investment Research
Can It Retain Momentum?
The answer is yes, thanks to rising estimates, improving operating strength and its cost-curbing initiatives.
The Zacks Consensus Estimate for MetLife’s 2023 earnings per share (EPS) is pegged at $7.78, indicating a 13.6% rise from $6.85 a year ago. Over the past month, it witnessed one upward estimate revision against none in the opposite direction. The company beat earnings estimates in two of the last four quarters and missed the same twice.
MetLife has undertaken several strategies to control costs and increase efficiencies. Our estimate for adjusted total expenses for 2023 indicates a 7.3% year-over-year decline, which will aid its margins. The company’s direct expense ratio was 12.2% for the second quarter, lower than the 2023 target of 12.6%. The consensus estimate for 2023 revenues stands at $70.9 billion.
Despite decreased real estate equity returns, MetLife’s adjusted net investment income is on the rise. The metric jumped 12% year over year to $5,040 million in the second quarter. Earlier, this Zacks Rank #2 (Buy) company stated that it expects pre-tax variable investment income to be around $2 billion for this year.
The company’s strong operations in the United States and Asia position the company for long-term growth. We expect adjusted net income growth from both these businesses to be positive this year, which will support its overall performance. Product introductions in Japan favored the results in Asia in the second quarter.
MET remains in sound financial health, with enough cash and a manageable debt. At the second-quarter end, it had cash and cash equivalents of $15,417 million, significantly higher than its short-term debt of $200 million. Also, it generated free cash flow of $11.9 billion in the trailing 12-month period. With growing operating strength, the figure is expected to rise in the future.
Risks
Despite the upside potential, there are a few factors that can hold back MET’s growth. Unfavorable underwriting margins in the Group Benefits business and declining premiums from MetLife Holdings are some of the headwinds faced by the company lately. Nevertheless, we believe that a systematic and strategic plan of action will drive long-term growth.
Other Stocks to Consider
Some other top-ranked stocks from the broader Finance are Axis Capital Holdings Limited (AXS - Free Report) , HCI Group, Inc. (HCI - Free Report) and Cincinnati Financial Corporation (CINF - Free Report) . While Axis Capital and HCI Group sport a Zacks Rank #1 (Strong Buy), Cincinnati Financial carries a Zacks Rank #2 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Axis Capital has a solid track record of beating earnings estimates in three of the last four quarters and missing in one, the average being 9.75%.
The Zacks Consensus Estimate for AXS’ 2023 and 2024 EPS is pegged at $8.41 and $9.31, indicating a year-over-year increase of 44.7% and 10.7%, respectively.
HCI Group has a solid track record of beating earnings estimates in each of the last four quarters, the average being 448.4%.
The Zacks Consensus Estimate for HCI’s 2023 and 2024 EPS is pegged at $3.25 and $4.35, indicating a year-over-year increase of 159.3% and 33.9%, respectively.
Cincinnati Financial has a solid track record of beating earnings estimates in three of the last four quarters and missing in one, the average being 25.25%. Year to date, CINF has gained 2.7%.
The Zacks Consensus Estimate for CINF’s 2023 and 2024 EPS is pegged at $5 and $5.88, indicating a year-over-year increase of 17.9% and 17.6%, respectively.