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MetLife (MET) Down 0.1% Since Last Earnings Report: Can It Rebound?

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It has been about a month since the last earnings report for MetLife (MET - Free Report) . Shares have lost about 0.1% in that time frame, underperforming the S&P 500.

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

MetLife Beats Q2 Earnings Estimates

MetLife, Inc.’s second-quarter 2018 operating earnings of $1.30 per share beat the Zacks Consensus Estimate of $1.17 by 11.1%. The bottom line improved 25% year over year on prudent underwriting and expense management.

Behind the Headlines

The company generated operating revenues of $21.2 billion, up 20.7% year over year. The top line beat the Zacks Consensus Estimate by 34.4%.
Adjusted premiums, fees & other revenues of $16.9 billion improved 48% year over year.  Net investment income of $4.5 billion increased 7%.

Total expenses of $20.1 million were up 40.3% year over year on higher policyholder benefits and claims, interest credited to policyholder account balances, interest expense on debt and other expenses.

Quarterly Segment Details

U.S.

Adjusted earnings in this segment surged 36% year over year to $671 million, attributable to the olid results at Group Benefits, Retirement and Income Solutions as well as Property & Casualty.

Adjusted premiums, fees & other revenues were $11.8 billion, up 86%. This uptrend is driven by a large pension risk transfer transaction in Retirement and Income Solutions.

Asia

Operating earnings of $363 million were up 17% year over year on a reported basis and up 16% on constant currency basis, fueled by volume growth, higher investment income and lower taxes.

Adjusted premiums, fees & other revenues were $2.1 billion, up 1% on reported basis but down 1% on a constant currency basis, given a continued shift from premium-based products to fee-based products.

Latin America

Operating earnings were $86 million, up 19% (down 3% at constant currency) year over year, attributable to higher taxes in the region.

Adjusted premiums, fees & other revenues were $972 million, up 5% on reported basis and 7% more on a constant currency basis, fueled by growth across the region.

EMEA

Operating earnings from EMEA increased 19% (up 15% on constant currency basis) year over year to $86 million.

Adjusted premiums, fees & other revenues were $673 million, up 8% reportedly and 5% on constant currency basis.

MetLife Holdings

Operating earnings from MetLife Holdings came in at $280 million, up 18% year over year owing to U.S. tax reform.
Operating premiums, fees & other revenues were $1.3 billion, down 6%, primarily due to Brighthouse separation-related impacts.

Corporate & Other

Corporate & other incurred an operating loss of $219 million, wider than $145 million loss in the prior-year quarter due to the negative impact of U.S. tax reform.

Financial Update

Variable investment income decreased to $176 million from $222 million in the year-ago quarter, attributable to lower private equity and hedge fund income.

Book value per share decreased 21% year over year to $50.28 as of Jun 30, 2018, largely due to the separation of Brighthouse Financial, Inc. and its subsidiaries.

Adjusted tangible return on equity expanded 400 basis points to 12.2%.
 

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in fresh estimates.

VGM Scores

At this time, MetLife has a subpar Growth Score of D, however its Momentum Score is doing a lot better with an A. Following the exact same course, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.

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

Zacks style scores indicate that the company's stock is suitable for value and momentum investors.

Outlook

Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, MetLife has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.




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