On Nov 23, 2016, shares of multi-line insurance giant MetLife Inc. MET hit a 52-week high of $55.49. The upside is believed to have been driven by a profitable third quarter reported earlier this month, an increase in share buyback authorization last week as well as restructuring initiatives taken recently.
Over the past 52 weeks, the stock has gained 9.5% compared with a rise of just 5.4% in the S&P 500 index over the same period.
Investors favorably viewed the company’s third-quarter results. Earnings of $1.28 per share surpassed the Zacks Consensus Estimate of $1.14 and were up from 62 cents reported in the year-ago quarter. Also, revenues of $18.1 billion surpassed the Zacks Consensus Estimate of $16.93 billion and increased 1% year over year.
Investors appreciate the recent sanction of a new $3 billion share repurchase program. The buyback, its largest ever, is in sync with management’s long-term target of generating incremental shareholder returns.
Investors are also optimistic about the company’s successful response to macro challenges. These actions, which include disciplined expense, business restructuring as well as capital management, have helped the company to sustain its earnings growth.
The stock must also have received a boost from the filing made with the SEC to spin off its U.S. life insurance unit into a new holding company called Brighthouse Financial Inc. This strategic business restructuring will shield the company from significant earnings as well as capital risk associated with the retail U.S. life insurance business. It will also provide the company some relief with regard to capital that was required to be maintained for this business. At the same time, it will give enough room to the company to focus on its core businesses.
MetLife carries a Zacks Rank #3 (Hold).
Some better-ranked players in the space are Alleghany Corp. Y , Arch Capital Group Limited ACGL and First American Financial Corporation FAF . Each of these stocks carries a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Alleghany delivered positive surprises in three of the last four quarters, with an average beat of 20.52%.
Arch Capital beat expectations in each of the last four quarters, with an average beat of 9.27%.
First American Financial Corporation delivered positive surprises in each of the last four quarters, with an average beat of 62.8%.
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