Manulife Financial Corporation’s MFC shares have rallied 41.1% in the past year compared with the industry's growth of 27.2%. The Finance sector and the Zacks S&P 500 index have returned 21.2% and 26.7%, respectively, in the said time frame. With a market capitalization of $53.21 billion, the average volume of shares traded in the last three months was 1.89 million. Currently priced at $30.52, the stock is slightly below its 52-week high of $33.07.
MFC Outperforms Industry, Sector, S&P in a Year
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MFC Trading Above 200-Day Moving Average
This life insurer is trading above its 200-day simple moving average (SMA) of $27.51, indicating solid upward momentum. SMA is a widely used technical analysis tool to predict future price trends by analyzing historical price data.
MFC’s Growth Projection Encourages
The Zacks Consensus Estimate for Manulife Financial’s 2025 earnings per share and revenues indicates an increase of 9.1% and 9.8%, respectively, from the corresponding 2024 estimates.
Earnings have grown 4.9% in the past five years, better than the industry average of 4.6%. The expected long-term earnings growth rate is 10%. MFC beat earnings estimates in each of the past four quarters, with an average surprise of 5.36%.
Manulife Financial’s Favorable 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.
Attractive Valuation
The company’s shares are trading at a price-to-book multiple of 1.63, lower than the industry average of 1.95. Before valuation expands, it is wise to take a position in the stock. This insurer has a Value Score of A, reflecting an attractive valuation.
The stock is also cheaper than Sun Life Financial SLF but expensive compared to Lincoln Financial Group LNC and Reinsurance Group of America, Incorporated RGA.
Key Points to Note for MFC
As its Asia business is reaping solid operational results, Manulife 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-poised 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 expanding distribution network.
Manulife 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.
Wrapping Up: Keep On Holding
Manulife is set to grow on solid Asia business, growing Wealth and Asset Management business, strong free cash flow conversion ratio and a strong capital position. A medium-term expense efficiency ratio target of less than 45%, banking on diligent expense management, should drive growth.
Consistent wealth distribution makes it an attractive pick for yield-seeking investors. Favorable ROE and attractive valuation also poise MFC for growth. The stock currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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Free: See Our Top Stock And 4 Runners UpLincoln National Corporation (LNC) : Free Stock Analysis Report
Manulife Financial Corp (MFC) : Free Stock Analysis Report
Reinsurance Group of America, Incorporated (RGA) : Free Stock Analysis Report
Sun Life Financial Inc. (SLF) : Free Stock Analysis Report
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
