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Why Is MetLife (MET) Down 11.5% Since the Last Earnings Report?

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About a month has gone by since the last earnings report for MetLife, Inc. (MET - Free Report) . Shares have lost about 11.5% in that time frame, underperforming the market.

Will the recent negative trend continue leading up to their next earnings release, or is the stock due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.

MetLife Earnings Beat Estimates in Q2

MetLife, Inc.’s second-quarter 2017 earnings of $1.30 per share beat the Zacks Consensus Estimate by 1.56% and soared 57% year over year.

Earnings improved on the back of volume growth, continued expense discipline and higher fees from improved equity markets.

The company continues to deliver strong results globally.

The company generated operating revenues of $17.6 billion, up 3% year over year on 4% higher premiums, fees & other revenues and 1% increase in net investment income. Revenues surpassed the Zacks Consensus Estimate of $17.1 billion.

Total operating expenses dipped 0.9% year over year to $15.5 billion.

Segment Details

U.S.

Operating earnings in this segment increased 13% year over year to $499 million, led by favorable underwriting results and volume growth. Operating premiums, fees & other revenues increased 13% to $6.3 billion.

Asia

Operating earnings were up 20% (or 21% on a constant currency basis) year over year to $310 million on volume growth and a reinsurance recovery in Australia, partly offset by higher expenses. Operating premiums, fees & other revenues in Asia decreased 1% (up 1% on a constant currency basis) to $2 billion.

Latin America

Operating earnings were $154 million, up 12% (14% on a constant currency basis) year over year. Earnings improved due to volume growth, higher investment margins and lower taxes. Operating premiums, fees & other revenues were $928 million, up 2% on reported as well as on constant currency basis due to non-renewal of a low-margin large contract.

EMEA

Operating earnings from EMEA increased 13% (or 24% on constant currency basis) year over year to $72 million primarily led by favorable expense margin and better underwriting. Operating premiums, fees & other revenues were $625 million, declined 1% (up 3% on a constant currency basis) from the prior-year period driven by growth in Turkey as well as in employee benefits in the United Kingdom.

MetLife Holdings

Operating earnings from MetLife Holdings came in at $235 million against the loss of $33 million in the prior-year quarter. Operating premiums, fees & other revenues were $1.4 billion, down 17% primarily due to the sale of MetLife Premier Client Group.

Corporate & Other

Corporate & other incurred an operating loss of $146 million compared to an operating loss of $243 million in the prior-year quarter. The loss incurred in the quarter was comparatively less due to lower tax rate and flattering investment margins.

BrightHouse Financial

BrightHouse Financial reported operating earnings of $283 million, down 5% year over year. The decline stemmed from lower universal life with secondary guarantees (ULSG) earnings, lower investment income and higher expenses. Operating premiums, fees & other revenues decreased 13% year over year to $1.3 billion, due to lower annuity and life insurance sales.

Investment & Financial Update

 Variable investment income decreased to $279 million from $285 million in the year-ago quarter driven by the strong performance of private equity and hedge fund investments.

Book Value per share decreased 4.1% year over year to $51.03 per share.

How Have Estimates Been Moving Since Then?

It turns out, fresh estimates have trended downward during the past month. There have been four revisions lower for the current quarter. In the past month, the consensus estimate has shifted lower by 23% due to these changes.

MetLife, Inc. Price and Consensus

 

MetLife, Inc. Price and Consensus | MetLife, Inc. Quote

VGM Scores

At this time, MetLife.'s stock has an average Growth Score of C, however its Momentum is lagging a bit with a D. The stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.

Based on our scores, the stock is more suitable for value investors than growth investors.

Outlook

Estimates have been broadly trending downward for the stock. The magnitude of this revision also indicates a downward shift. It's no surprise that the stock has a Zacks Rank #5 (Strong Sell). We are expecting a below average return from the stock in the next few months.




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