Manulife Financial Corp. (MFC - Free Report) remains poised for growth, riding on expanding wealth and asset management business, besides growing presence in Asia and effective capital deployment. The Zacks Rank #3 (Hold) insurer looks promising, banking on solid estimate revision, a strong industry rank and growth drivers.
Growth Projections: The Zacks Consensus Estimate for earnings per share is $1.77 on revenues of $40.6 billion for 2017, thus reflecting a year-over-year increase 0.5%. For 2018, the Zacks Consensus Estimate for earnings per share is pegged at $1.91 on revenues of $35.2 billion, reflecting an improvement of 8.1%.
Manulife Financial has long-term expected earnings per share growth of 9.5%.
Northbound Estimates: The Zacks Consensus Estimate for 2017 has moved up 9.9% in the last 60 days while the same for 2018 has improved 7.9% over the same time frame.
An Outperformer: Manulife Financial’s shares have surged 40.9% in a year, outperforming the industry’s rally of 27.2%. The shares have also outperformed the S&P 500, increasing 13.5% over the same time frame.
VGM Score: Manulife Financial carries a VGM Score of A. Here V stands for Value, G for Growth and M for Momentum and the score is a weighted combination of these three factors.
Shares Undervalued: Looking at the company’s price-to-book ratio — the best multiple for valuing life insurers because of large variations in their earnings results from one quarter to the next — valuation looks attractive at the current level. The company has a trailing 12-month P/B ratio of 1.3, falling significantly below the industry average of 2.3. Undervalued shares with growth prospects are best investment bets. Also, the stock carries a Value Score of A. Value investors look for those stocks with value lower than the intrinsic one.
Growth Drivers in Place
Manulife aggressively develops business in Asia that in turn helps the company reap solid operational results. Notably, the Asia business now contributes one-third of its earnings. In a bid to tap the expanding Asian market, Manulife has widened its distribution network across the region, securing and deepening strategically important distribution agreements with key partners in Japan and Indonesia.
The company consistently broadens its footprint in terms of growing wealth and asset management business. It already boasts a compelling presence in North America and Asia with plans to expand across Europe and the wider EMEA market, which the company earmarked as significant growth area.
The insurer deserves kudos for an impressive inorganic growth story as that helps it strengthen international base while adding stimulus to the core business.
A robust capital position also prompted Manulife to hike the dividend four times in three years, thus accounting for an accumulative increase of 58%.
Manulife operates in an industry, currently ranked at #25, which represents the top 10% of the Zacks Industry Ranks.
Stocks to Consider
Some better-ranked stocks from the same industry are Sun Life Financial Inc. (SLF - Free Report) , Reinsurance Group of America Inc. (RGA - Free Report) and Health Insurance Innovations, Inc. (HIIQ - Free Report) .
Health Insurance Innovations operates as a developer, distributor and administrator of cloud-based individual health and family insurance plans, plus supplemental products in the United States. The company delivered positive surprises in all the trailing four quarters with an average beat of 87.49%. The stock flaunts a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Sun Life provides protection and wealth management products and services to individual and group customers worldwide. The company delivered a four-quarter average positive surprise of 10.53%. The stock carries a Zacks Rank #2 (Buy).
Reinsurance Group primarily engages in traditional individual and group life, asset-intensive, critical illness and financial reinsurance. The company delivered positive surprises in all the last four quarters with the average beat being 4.73%. The stock carries a Zacks Rank #2.
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