Manulife Financial Corporation (MFC Quick QuoteMFC - Free Report) shares have rallied 22.3% year to date, outperforming the industry’s increase of 17.3% and the Finance sector’s increase of 13.5%. With a market capitalization of $39.4 billion, the average volume of shares traded in the last three months was 3.2 million.

The strength of its Asia business, expanding Wealth and Asset Management business and solid capital position continue to drive this Zacks Rank #3 (Hold) life insurer.

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.

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Can It Retain the Momentum?

The Zacks Consensus Estimate for 2024 earnings stands at $2.65, suggesting an increase of 8.2% on 9.6% higher revenues of $44.5 billion.

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.

Manulife expects the Asia business, which contributes significantly to its earnings, to account for half of the company’s core earnings by 2025 and play a crucial role in its long-term growth. This leading insurer is continually 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.

MFC, one of the three dominant life insurers within the domestic Canadian market, has been accelerating growth in the highest potential businesses and targets two-thirds of core earnings from these businesses. Its inorganic growth is impressive as this life insurer prudently deploys capital in high-growth, less capital-intensive and higher-return businesses.

The industry is undergoing accelerated digitalization. In tandem with the industry trend, MFC 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. The company 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%. Notably, its free cash flow conversion has remained more than 100% over the last many quarters, reflecting its solid earnings.

The Zacks Consensus Estimate for MFC’s 2024 earnings has moved 3 cents north in the past 30 days, reflecting analysts’ optimism.

Stocks to Consider

Some top-ranked stocks from the insurance space are American Equity Investment Life Holding , Primerica (PRI Quick QuotePRI - Free Report) and Reinsurance Group of America (RGA Quick QuoteRGA - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

American Equity delivered a trailing four-quarter average earnings surprise of 13.53%. The stock has gained 21.2% year to date. The Zacks Consensus Estimate for AEL’s 2024 earnings has moved 3 cents higher in the past 30 days.

Primerica delivered a trailing four-quarter average earnings surprise of 7.87%. The stock has surged 44.2% year to date. The Zacks Consensus Estimate for PRI’s 2024 earnings has moved 0.2% higher in the past 30 days.

Reinsurance Group delivered a trailing four-quarter average earnings surprise of 18.81%. The stock has gained 13.9% year to date. The Zacks Consensus Estimate for RGA’s 2024 earnings has moved 1.2% north in the past 30 days.