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Here's Why Manulife (MFC) Shares are Investors' Favorite Now
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Manulife Financial Corporation's (MFC - Free Report) shares have rallied 8.5% year to date, outperforming the industry’s growth of 4.2%, the Finance sector’s increase of 13.5% and the S&P 500 Composite’s gain of 7.2%. With a market capitalization of $43.4 billion, the average volume of shares traded in the last three months was 3.4 million.
The strength of its Asia business, expanding Wealth and Asset Management business and solid capital position continue to drive this currently Zacks Rank #2 (Buy) life insurer. The insurer delivered an earnings surprise in the last five quarters.
Manulife’s ROE for the trailing 12 months is 16%, better than the industry's average of 15.4%. This reflects Manulife’s efficiency in utilizing shareholders’ funds. It targets 13% ROE over the medium term.
It has a VGM Score of B. The VGM Score rates a stock on its combined weighted styles, helping to identify those with the most attractive value, best growth and most promising momentum.
Image Source: Zacks Investment Research
Growth Drivers
The Zacks Consensus Estimate for 2024 and 2025 earnings per share (EPS) is $2.71 and $2.97, respectively, suggesting an increase of 8.2% and 9.7%.
While earnings have grown 4.9% over the last five years, outperforming the industry average of 2%, 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 targets the Asia business to account for half of the company’s core earnings by 2025 and play a crucial role in its long-term growth. This business presently contributes significantly to its earnings. Thus, the insurer is continually scaling up its business across Asia. We believe MFC is well-poised to capitalize on the growing opportunities of the Asia market by banking on its strategic initiatives.
Manulife 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.
Manulife is continually building on its digital platform as well as accelerating the adoption of new technologies such as generative AI. This step is in tandem with the industry trend of undergoing accelerated digitalization.
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 1.9% north in the past 30 days, reflecting analysts’ optimism.
Attractive Valuation
The company’s shares are trading at a price-to-book multiple of 1.39, lower than the industry average of 1.73. Before valuation expands, it is wise to take a position in the stock.
This insurer has a Value Score of A, reflecting an attractive valuation.
American Equity delivered a trailing four-quarter average earnings surprise of 21.72%. The stock has lost 0.4% year to date. The Zacks Consensus Estimate for AEL’s 2024 earnings has moved 0.1% north in the past 30 days.
Primerica delivered a trailing four-quarter average earnings surprise of 3.10%. The stock has surged 21% year to date. The Zacks Consensus Estimate for PRI’s 2024 and 2025 earnings translate to 10.5% and 10% year-over-year increase, respectively.
BRP Group delivered a trailing four-quarter average earnings surprise of 18.81%. The stock has risen 23.8% year to date. The Zacks Consensus Estimate for BRP’s 2024 and 2025 earnings translate to 38.4% and 35.5% year-over-year increase, respectively.
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Here's Why Manulife (MFC) Shares are Investors' Favorite Now
Manulife Financial Corporation's (MFC - Free Report) shares have rallied 8.5% year to date, outperforming the industry’s growth of 4.2%, the Finance sector’s increase of 13.5% and the S&P 500 Composite’s gain of 7.2%. With a market capitalization of $43.4 billion, the average volume of shares traded in the last three months was 3.4 million.
The strength of its Asia business, expanding Wealth and Asset Management business and solid capital position continue to drive this currently Zacks Rank #2 (Buy) life insurer. The insurer delivered an earnings surprise in the last five quarters.
Manulife’s ROE for the trailing 12 months is 16%, better than the industry's average of 15.4%. This reflects Manulife’s efficiency in utilizing shareholders’ funds. It targets 13% ROE over the medium term.
It has a VGM Score of B. The VGM Score rates a stock on its combined weighted styles, helping to identify those with the most attractive value, best growth and most promising momentum.
Image Source: Zacks Investment Research
Growth Drivers
The Zacks Consensus Estimate for 2024 and 2025 earnings per share (EPS) is $2.71 and $2.97, respectively, suggesting an increase of 8.2% and 9.7%.
While earnings have grown 4.9% over the last five years, outperforming the industry average of 2%, 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 targets the Asia business to account for half of the company’s core earnings by 2025 and play a crucial role in its long-term growth. This business presently contributes significantly to its earnings. Thus, the insurer is continually scaling up its business across Asia. We believe MFC is well-poised to capitalize on the growing opportunities of the Asia market by banking on its strategic initiatives.
Manulife 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.
Manulife is continually building on its digital platform as well as accelerating the adoption of new technologies such as generative AI. This step is in tandem with the industry trend of undergoing accelerated digitalization.
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 1.9% north in the past 30 days, reflecting analysts’ optimism.
Attractive Valuation
The company’s shares are trading at a price-to-book multiple of 1.39, lower than the industry average of 1.73. Before valuation expands, it is wise to take a position in the stock.
This insurer has a Value Score of A, reflecting an attractive valuation.
Other Stocks to Consider
Some other top-ranked stocks from the insurance space are American Equity Investment Life Holding (AEL - Free Report) , Primerica (PRI - Free Report) and BRP Group (BRP - Free Report) , each carrying a Zacks Rank of 2 at present. 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 21.72%. The stock has lost 0.4% year to date. The Zacks Consensus Estimate for AEL’s 2024 earnings has moved 0.1% north in the past 30 days.
Primerica delivered a trailing four-quarter average earnings surprise of 3.10%. The stock has surged 21% year to date. The Zacks Consensus Estimate for PRI’s 2024 and 2025 earnings translate to 10.5% and 10% year-over-year increase, respectively.
BRP Group delivered a trailing four-quarter average earnings surprise of 18.81%. The stock has risen 23.8% year to date. The Zacks Consensus Estimate for BRP’s 2024 and 2025 earnings translate to 38.4% and 35.5% year-over-year increase, respectively.