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Why Should You Stay Invested in Manulife (MFC) Stock Now?

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Manulife Financial Corporation (MFC - Free Report) is poised to grow on the strength of its Asia business, expanding Wealth and Asset Management business and a solid capital position. These, coupled with favorable growth estimates, make it worth retaining in one’s portfolio.

The company has a VGM Score of B. This helps to identify stocks with the most attractive value, growth and momentum.

Zacks Rank & Price Performance

Manulife currently carries a Zacks Rank #3 (Hold). In the past three months, the stock has gained 6.2% compared with the industry’s growth of 5.6%.

Zacks Investment Research
Image Source: Zacks Investment Research

Optimistic Growth Projections

The Zacks Consensus Estimate for 2023 earnings stands at $2.45, suggesting an increase of 2.9%. The consensus estimate for 2024 earnings stands at $2.62, suggesting an increase of 7.1%.

While its earnings have grown 6.2% over the last five years, outperforming the industry average of 2.1%, the long-term earnings growth rate is currently pegged at 10%. Manulife targets core EPS growth between 10% and 12% over the medium term.

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’ funds. It targets 13% ROE over the medium term.

Northbound Estimate Revision

The Zacks Consensus Estimate for MFC’s 2023 earnings has moved 2 cents north in the past 30 days, reflecting analysts’ optimism.

Business Tailwinds

Manulife’s Asia business contributes significantly to its earnings. The insurer expects core earnings from the Asia region to account for half of the company’s core earnings by 2025 and play a crucial role in its long-term growth. To that end, Manulife remains committed to scaling up its business across Asia. We expect MFC to retain a strong hold over the Asian markets and continue to pursue strategic initiatives to capitalize on the growing opportunities.

MFC is expanding its Wealth and Asset Management business and has identified Europe (and the wider EMEA market) as a significant growth area. It is making long-term investments in this region.

The life insurer remains focused on accelerating growth in the highest potential businesses and targets two-thirds of core earnings from these businesses. Its inorganic growth is impressive as MFC prudently deploys capital in high-growth, less capital-intensive and higher-return businesses.

In sync with the industry trend of accelerated digitalization, Manulife is continually building on its digital platform as well as accelerating the adoption of new technologies such as generative AI.

Banking on its sturdy capital position, MFC engages in effective capital deployment. MFC has increased its dividend at a six-year CAGR of 10% and targets a 35-45% dividend payout over the medium term.

MFC is strengthening its balance sheet and thus targets a leverage ratio of 25%.

Stocks to Consider

Some better-ranked stocks from the insurance industry are F&G Annuities & Life, Inc. (FG - Free Report) , American Equity Investment Life Holding (AEL - Free Report) and Primerica (PRI - Free Report) .

The Zacks Consensus Estimate for F&G Annuities’ 2023 and 2024 earnings has moved 0.6% and 4.8% up in the past 30 days. FG sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for FG’s 2023 and 2024 earnings per share indicates year-over-year increases of 6.3% and 44.2%, respectively.  Year to date, FG shares have gained 110.5%.

American Equity delivered a four-quarter average earnings surprise of 13.53%. AEL carries a Zacks Rank #2 (Buy).

The Zacks Consensus Estimate for AEL’s 2023 and 2024 earnings per share indicates year-over-year increases of 9% and 1.4%, respectively. Year to date, AEL shares have risen 20.2%.

Primerica’s earnings surpassed the Zacks Consensus Estimate in the last four quarters, the average beat being 7.84%. PRI carries a Zacks Rank #2.

The Zacks Consensus Estimate for PRI’s 2023 and 2024 earnings per share indicates year-over-year increases of 1.9% and 0.8%, respectively.  Year to date, PRI shares have gained 48.4%.

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