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Why Should You Retain Manulife (MFC) in Your Portfolio?

Manulife (MFC) is poised to grow, given its solid in-force business growth, disciplined expense management, and expanding wealth and asset management business.

This story originally appeared on Zacks

Manulife Financial Corporation MFC has been in investors' good books on the back of higher average assets under management and administration, solid Asia business and robust capital position.

- Zacks

Growth Projections

The Zacks Consensus Estimate for Manulife Financial’s 2022 earnings per share is pegged at $2.85, indicating year-over-year increases of 9.96%.

Estimate Revision

Estimates for 2022 have moved up nearly 0.7% in the past 60 days, reflecting investors’ optimism.

Earnings Surprise History

Manulife Financial has a decent earnings surprise history. Its earnings beat estimates in three of the last four quarters and missed the same in one, the average being 4.5%.

Zacks Rank & Price Performance

Manulife Financial currently carries a Zacks Rank #3 (Hold). In the past year, the stock has rallied 6.2%, outperforming the industry’s growth of 3.1%.

Zacks Investment ResearchImage Source: Zacks Investment Research

Business Tailwinds

The life insurer remained focused on three of its operating divisions with the highest potential Asia, Canada, and Global Wealth and Asset Management (“WAM”).

By virtue of growth in net fee income driven by higher average assets under management and administration from the favorable impact of markets, and net inflows and favorable business mix, the Global WAM business should continue to improve in the long run.

In-force business growth and favorable product mix, favorable policyholder experience, and higher new business gains should continue to drive Manulife Financial’s Asia business.

Canada business is likely to gain from favorable policyholder experience in individual insurance, higher in-force earnings from retail insurance products and the non-recurrence of a number of smaller unfavorable experience-related items.

Manulife Financial remains focused to deliver 10% to 12% core EPS growth over the medium term.

In November 2021, a subsidiary of Manulife had inked an annuity reinsurance transaction with Venerable Holdings Inc., where it will reinsure about 76% of its legacy U.S. Variable Annuity (“VA”) block to the subsidiary of Venerable. The transaction is expected to lower total U.S. VA net amount at risk as well as lower equity sensitivities from variable annuity guarantees. Manulife estimates $2 billion capital release due to the deal, with which it intends to increase the proposed share buyback.

The life insurer boasts of financial flexibility by virtue of solid growth in new business value, robust annualized premium equivalent sales growth and strong balance sheet. Riding on increase in retained earnings and favorable impact of a weaker Canadian dollar, financial leverage improved, thus reflecting continued financial flexibility. MFC targets a leverage ratio of 25% and remain committed to dividend payout ratio of 30% to 40%.

Expense efficiency ratio improved as core earnings growth outpaced core expense growth. Manulife remain committed to achieve the expense efficiency ratio of less than 50% by 2022.

Stocks to Consider

Some better-ranked stocks from the life insurance sector include American Equity Investment Life Holding AEL, Athene ATH and Sun Life Financial SLF. While American Equity sports a Zacks Rank #1 (Strong Buy), Athene and Sun Life Financial carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

American Equity’s earnings surpassed estimates in two of the last four quarters and missed in the other two, the average beat being 31.49%.

In the past year, AEL has gained 40.9%. The Zacks Consensus Estimate for 2022 earnings has moved 5.7% north in the past 60 days.

Athene delivered a four-quarter average earnings surprise of 46.12%. In the past year, the stock has gained 93.9%.

Athene has an impressive Value Score of A that reflects the attractive valuation of the stock. ATH has a favorable VGM Score of B. VGM Score helps identify stocks with the most attractive value, best growth and the most promising momentum.

The Zacks Consensus Estimate for Sun Life Financial’s 2022 earnings implies 9.09% year-over-year growth. SLF delivered a four-quarter average earnings surprise of 7.74%.

In the past year, Sun Life Financial has gained 23.7%.SLF’s expected long-term earnings growth rate is 9%. SLF has an impressive Value Score of A that reflects the attractive valuation of the stock.

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Manulife Financial Corp (MFC): Free Stock Analysis Report


American Equity Investment Life Holding Company (AEL): Free Stock Analysis Report


Sun Life Financial Inc. (SLF): Free Stock Analysis Report


Athene Holding Ltd. (ATH): Free Stock Analysis Report


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