Manulife Financial Corporation (MFC - Free Report) is well positioned for growth, banking on its sturdy Asia business, cost savings, expanding wealth and asset management business, and strong capital position. The company has a Growth Score of B. This style score analyzes the company’s growth prospects. The company’s expected long-term earnings growth rate is pegged at 10%.
Manulife’s return on equity of 13.7% is better than the industry average of 8.9%. Return on equity is a profitability measure, identifying the company’s efficiency in utilizing its shareholders’ funds.
Manulife is one of the three dominant life insurers in its domestic Canada market, and is rapidly growing operations in the United States and several countries in Asia. The company has an impressive VGM Score of A. This style score helps identify stocks with the most attractive value, best growth and most promising momentum.
Manulife’s Asia business contributes majorly to its earnings. In the first quarter of 2019, Asia delivered core earnings growth of 17% while new business value grew 23%. An expanded distribution network and distribution agreements with key partners in the region should continue to drive results.
In its efforts to improve risk profile by lowering volatility in legacy blocks, the company intends to reduce its allocation to alternative long-duration assets. Manulife Financial is thus focused on optimizing its portfolio, with an intention to release $5 billion in capital by 2022.
The company is also targeting an expense efficiency ratio of less than 50% or $1 billion in cost savings and avoidance by 2022. It has already achieved $300-million cost savings in 2018 and is on track to achieve cost savings of at least $500 million in 2019 and $700 million in 2020.
Manulife boasts more than $1 trillion in global assets under management and administration at first-quarter 2019 end, and remains focused on consistently growing its wealth and asset management business.
Shares of this Zacks Rank #3 (Hold) life insurer have rallied 22.2% year to date, outperforming the industry’s 14.3% growth and Zacks S&P 500 composite’s rise of 12.1%.
A sturdy balance sheet and solid operational performance support effective capital deployment through dividend hikes. Its dividend yield of 4.3% betters the industry average of 2.4%, making it an attractive pick for yield-seeking investors.
The Zacks Consensus Estimate for 2019 earnings is estimated to grow 3.8%. The consensus mark for revenues suggests 51.3% rise from the year-ago reported figure.
Stocks to Consider
Some better-ranked stocks from the insurance industry are American Equity Investment Life Holding Company (AEL - Free Report) , Reinsurance Group of America, Incorporated (RGA - Free Report) and Aflac Incorporated (AFL - Free Report) . Each of these stocks currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
American Equity Investment provides life insurance products and services in the United States. The company pulled off four-quarter average positive surprise of 10.54%.
Reinsurance Group of America offers individual and group life and health insurance products, including term life, credit life, universal life, whole life, group life and health among others. The company pulled off a four-quarter average positive surprise of 5.62%.
Aflac provides voluntary supplemental health and life insurance products. The company pulled off four-quarter average positive surprise of 7.10%.
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