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Manulife Financial on Strong Growth Graph: Apt to Hold?


Estimates for Manulife Financial Corporation MFC have been revised upward over the past 30 days, reflecting analysts’ confidence in the stock. The stock has seen the Zacks Consensus Estimate for 2018 move nearly 1% north to $2.03 and for 2019, revised 0.5% upward to $2.19.

Manulife Financial is one of the three dominant life insurers within its domestic Canadian market and possesses rapidly growing operations in the United States as well as across several Asian countries. Shares of this Zacks Rank #3 (Hold) life insurance provider have lost 11.2% in a year, narrower than the industry’s 13.2% decrease.

Moreover, the company has an impressive VGM Score of A. Here V stands for Value, G for Growth and M for Momentum with the score being a weighted combination of all three factors.

Return on equity stands at 12.7%, above its industry average of 11.3%. Return on equity underscores profitability, identifying how the company is effectively utilizing its shareholders’ money.

Let’s focus on the factors that make Manulife Financial a stock to retain for attractive returns.

Thriving Asian Business: Manulife Financial’s Asia business contributes majorly to its earnings. The company has expanded its distribution network across the region, securing and deepening strategically important distribution agreements. It is well-poised to gain a strong foothold on the Asian markets, which looks to play a crucial role in its long-term growth as the insurer steadily undertakes strategic initiatives to capitalize on growth opportunities.

Expanding Wealth and Asset Management Business: The company has been consistently growing its wealth and asset management business. It already has a solid presence in North America and Asia and identified Europe as a significant growth area. The company had more than $1.1 trillion in global assets under management and administration at second-quarter end.

Compelling Inorganic Growth Story: Manulife Financial boasts an impressive inorganic growth profile with strategic acquisitions that has added scale to the company’s operations, helped accelerate growth in Asia and also fortified footprint in the mid and large-case markets.

Effective Capital Management: Manulife Financial’s stable cash flow and sufficient cash balances will continue to boost liquidity. Banking on operational efficiencies, the company has hiked its dividend five times over a span of three years.

Its dividend yield of 3.8% betters the industry’s average of 2.3%. This makes the stock an attractive pick for yield-seeking investors.

Growth Projections: The Zacks Consensus Estimate for current-year earnings per share is pegged at $2.03, representing a year-over-year increase of 18.7%. For 2019, the consensus mark for the bottom line stands at $2.19, translating into a 7.8% year-over-year rise.

The company’s expected long-term earnings growth is pegged at 10%.

Positive Earnings Surprise History: Manulife Financial displays an encouraging earnings surprise history, exceeding the Zacks Consensus Estimate in three of the last four quarters. This outperformance underlines the company’s operational efficiency. Its average four-quarter positive earnings surprise stands at 4.40%.

Stocks to Consider

Investors interested in property and casualty industry can check out a few better-ranked stocks like Athene Holding Ltd. ATH, FGL Holdings FG and Primerica, Inc. PRI, each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Athene Holding issues, reinsures and acquires retirement savings products in the United States, the District of Columbia and Germany. It came up with an average four-quarter positive surprise of 15.03%.

FGL Holdings sells individual life insurance products and annuities in the United States. It pulled off an average four-quarter earnings surprise of 7.93%.

Primerica distributes financial products to middle income households in the United States and Canada. It delivered an average four-quarter beat of 5.89%.

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