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MFC Stock Outperforms Industry, Hits 52-Week High: Time to Hold?
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Key Takeaways
Manulife Financial targets half its core earnings from Asia by 2025 amid strong regional results.
MFC is expanding its Wealth and Asset Management business, with Europe marked as a key growth area.
Manulife Financial boosts shareholder returns through dividends, buybacks and strong free cash flow.
Manulife Financial Corporation (MFC - Free Report) hit a 52-week high of $35.62 on Dec. 5. Shares closed at $35.29 after gaining 10.5% in the past year, outperforming the industry’s decline of 1.4%.
Manulife Financial has outperformed its peers, including Primerica, Inc. (PRI - Free Report) , Voya Financial, Inc. (VOYA - Free Report) and Reinsurance Group ofAmerica, Incorporated (RGA - Free Report) . Shares of PRI, VOYA and RGA have lost 11.8%, 11.1% and 10.4%, respectively, in the past year.
Image Source: Zacks Investment Research
With a capitalization of $59.43 billion, the average number of shares traded in the last three months was 1.8 million.
The life insurer has a solid track record of beating earnings estimates in two of the past four quarters and missing in the other two, with an average surprise of 4.93%.
MFC Trading Above 50-Day and 200-Day Moving Averages
Shares of Manulife Financial are trading above the 50-day and 200-day simple moving averages (SMA) of $33.06 and $31.29, indicating solid upward momentum. SMA is a widely used technical analysis tool to predict future price trends by analyzing historical price data.
Image Source: Zacks Investment Research
Premium Valuation
Manulife Financial shares are trading at a premium to the industry. The company’s price-to-earnings ratio of 11.34X is higher than the industry average of 7.85X.
Average Target Price for MFC Suggests Upside
Based on short-term price targets offered by 12 analysts, the Zacks average price target is $38.06 per share. The average suggests a potential 7.9% upside from the last closing price.
Image Source: Zacks Investment Research
MFC’s Growth Projection Encourages
The Zacks Consensus Estimate for Manulife Financial’s 2025 earnings per share indicates a year-over-year increase of 1.4%. The consensus estimate for 2026 earnings per share indicates an increase of 9.4% from the corresponding 2025 estimates.
Manulife Financial’s Higher Return on Capital
Return on equity in the trailing 12 months was 16.1%, better than the industry average of 15.4%. This highlights the company’s efficiency in utilizing shareholders’ funds.
Key Points to Note for MFC
As its Asia business is reaping solid operational results, Manulife Financial targets to account for half of its core earnings by 2025 and play a crucial role in its long-term growth. Thus, the insurer is continually scaling up its business across Asia. We believe MFC is well-positioned to benefit from continued business growth momentum, higher expected earnings on insurance contracts and higher expected investment earnings, with notable growth from the largest in-force business, Hong Kong and an expanding distribution network.
Manulife Financial 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 has been accelerating growth in the highest-potential businesses. Its inorganic growth is impressive, as this life insurer prudently deploys capital in high-growth, less capital-intensive and higher-return businesses.
Banking on its sturdy capital position, MFC distributes wealth to shareholders through higher dividends and share buybacks. The company has increased its dividend at a seven-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 few quarters, reflecting its solid earnings.
Conclusion
Manulife Financial is set to grow on solid Asia business, growing Wealth and Asset Management business, strong free cash flow conversion ratio and a solid capital position. A medium-term expense efficiency ratio target of less than 45%, banking on diligent expense management, should drive growth.
Favorable growth estimates and higher return on capital should continue to benefit the insurer over the long term.
Consistent wealth distribution makes it an attractive pick for yield-seeking investors and favorable ROE also poises MFC for growth. Given the premium valuation, investors should wait for a better entry point for this Zacks Rank #3 (Hold) stock. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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MFC Stock Outperforms Industry, Hits 52-Week High: Time to Hold?
Key Takeaways
Manulife Financial Corporation (MFC - Free Report) hit a 52-week high of $35.62 on Dec. 5. Shares closed at $35.29 after gaining 10.5% in the past year, outperforming the industry’s decline of 1.4%.
Manulife Financial has outperformed its peers, including Primerica, Inc. (PRI - Free Report) , Voya Financial, Inc. (VOYA - Free Report) and Reinsurance Group of America, Incorporated (RGA - Free Report) . Shares of PRI, VOYA and RGA have lost 11.8%, 11.1% and 10.4%, respectively, in the past year.
Image Source: Zacks Investment Research
With a capitalization of $59.43 billion, the average number of shares traded in the last three months was 1.8 million.
The life insurer has a solid track record of beating earnings estimates in two of the past four quarters and missing in the other two, with an average surprise of 4.93%.
MFC Trading Above 50-Day and 200-Day Moving Averages
Shares of Manulife Financial are trading above the 50-day and 200-day simple moving averages (SMA) of $33.06 and $31.29, indicating solid upward momentum. SMA is a widely used technical analysis tool to predict future price trends by analyzing historical price data.
Image Source: Zacks Investment Research
Premium Valuation
Manulife Financial shares are trading at a premium to the industry. The company’s price-to-earnings ratio of 11.34X is higher than the industry average of 7.85X.
Average Target Price for MFC Suggests Upside
Based on short-term price targets offered by 12 analysts, the Zacks average price target is $38.06 per share. The average suggests a potential 7.9% upside from the last closing price.
Image Source: Zacks Investment Research
MFC’s Growth Projection Encourages
The Zacks Consensus Estimate for Manulife Financial’s 2025 earnings per share indicates a year-over-year increase of 1.4%. The consensus estimate for 2026 earnings per share indicates an increase of 9.4% from the corresponding 2025 estimates.
Manulife Financial’s Higher Return on Capital
Return on equity in the trailing 12 months was 16.1%, better than the industry average of 15.4%. This highlights the company’s efficiency in utilizing shareholders’ funds.
Key Points to Note for MFC
As its Asia business is reaping solid operational results, Manulife Financial targets to account for half of its core earnings by 2025 and play a crucial role in its long-term growth. Thus, the insurer is continually scaling up its business across Asia. We believe MFC is well-positioned to benefit from continued business growth momentum, higher expected earnings on insurance contracts and higher expected investment earnings, with notable growth from the largest in-force business, Hong Kong and an expanding distribution network.
Manulife Financial 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 has been accelerating growth in the highest-potential businesses. Its inorganic growth is impressive, as this life insurer prudently deploys capital in high-growth, less capital-intensive and higher-return businesses.
Banking on its sturdy capital position, MFC distributes wealth to shareholders through higher dividends and share buybacks. The company has increased its dividend at a seven-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 few quarters, reflecting its solid earnings.
Conclusion
Manulife Financial is set to grow on solid Asia business, growing Wealth and Asset Management business, strong free cash flow conversion ratio and a solid capital position. A medium-term expense efficiency ratio target of less than 45%, banking on diligent expense management, should drive growth.
Favorable growth estimates and higher return on capital should continue to benefit the insurer over the long term.
Consistent wealth distribution makes it an attractive pick for yield-seeking investors and favorable ROE also poises MFC for growth.
Given the premium valuation, investors should wait for a better entry point for this Zacks Rank #3 (Hold) stock. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.