A month has gone by since the last earnings report for MetLife (MET - Free Report) . Shares have added about 6.4% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is MetLife due for a pullback? 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 Q3 Earnings Estimate
MetLife, Inc. third-quarter 2018 operating earnings of $1.38 per share beat the Zacks Consensus Estimate of $1.25 by 10.4%. The bottom line also surged 33% year over year.
The reported quarter witnessed volume growth, favorable underwriting, expense management and an improved investment income.
Behind the Headlines
The company generated operating revenues of $16.4 billion, down 2% year over year. However, the top line beat the Zacks Consensus Estimate by 1.7%.
Adjusted premiums, fees & other revenues of $11.9 billion decreased 5% year over year. Net investment income of $4.5 billion increased 4%.
Total expenses of $15.7 million were up 3.1% year over year on higher interest expense on debt.
Quarterly Segment Details
Adjusted earnings in this segment soared 47% year over year to $795 million, driven by the U.S. tax reform, a favorable underwriting as well as volume growth. All three divisions, namely- Group Benefits, Retirement and Income Solutions as well as Property & Casualty delivered sturdy results.
Adjusted premiums, fees & other revenues were $6.9 billion, down 7%, attributable to lower pension risk transfer transactions in Retirement and Income Solutions.
Operating earnings of $266 million were down 15% (14% on constant currency basis) year over year as annual actuarial assumption review offset the favorable impact of volume growth.
Adjusted premiums, fees & other revenues were $2.1 billion, down 2% on reported basis and 1% at constant currency.
Operating earnings were $170 million, up 4% (13% at constant currency) year over year, aided by volume growth, favorable underwriting and the annual actuarial assumption review. However, the negative impact of U.S. tax reform was a partial offset.
Adjusted premiums, fees & other revenues were $928 million, down 1% on reported basis while up 7% at constant currency, fueled by growth across the region.
Operating earnings from EMEA decreased 23% (17% on constant currency basis) year over year to $55 million, attributable to annual actuarial assumption review.
Adjusted premiums, fees & other revenues were $634 million, flat year over year but up 3% at constant currency.
Operating earnings from MetLife Holdings came in at $327 million, down 10% year over year, attributable to annual actuarial assumption review and other insurance adjustments, partially offset by the favorable impact of U.S. tax reform.
Operating premiums, fees & other revenues were $1.3 billion, down 5% year over year.
Corporate & Other
Corporate & other incurred an operating loss of $237 million, narrower than $336 million loss in the prior-year quarter.
Variable investment income increased to $221 million from $153 million in the year-ago quarter, driven by higher private equity and prepayment income.
Book value per share declined 6% year over year to $48.94 as of Sep 30, 2018.
Adjusted tangible return on equity expanded 380 basis points to 12.9%.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in fresh estimates.
At this time, MetLife has a subpar Growth Score of D, though it is lagging a bit on the Momentum Score front with an F. However, 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 B. If you aren't focused on one strategy, this score is the one you should be interested in.
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions indicates a downward shift. It comes with little surprise MetLife has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.