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Is a Beat in Store for MetLife (MET) This Earnings Season?

Zacks Equity Research
·4-min read

MetLife, Inc. MET is set to release first-quarter 2020 earnings on May 6.

For the to-be-reported quarter, the Zacks Consensus Estimate for earnings is pegged at $1.45 per share, indicating a 2.03% dip from the year-ago reported figure. The consensus mark for revenues suggests an upside of 8.17% from the year-earlier reported number.

Factors at Play

Within the U.S. business segment, strong growth in voluntary products is likely to have aided Group Benefits premium. The company’s brand name, product sets, customer base and distribution reach might have driven sales of voluntary products. Within the Retirement and Income Solutions sub-segment, premium growth is expected to have been driven by higher pension risk transfer transactions. Within the property and casualty segment, catastrophe losses are likely to have weighed on underwriting margins. The Zacks Consensus Estimate for premium from the U.S. business is pegged at $6.82 billion, indicating an 11.8% increase from the year-ago reported figure.

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The company’s Asia business is likely to have witnessed soft sales in Korea, China and India. Also, the impact of the divested business in Hong Kong and a large group case in Australia might have been a drag on overall sales.

In the EMEA business, strong sales are likely to have been seen across the region. The Zacks Consensus Estimate for EMEA business is pegged at $584 million, indicating an 11.4% decrease from the year-ago reported figure.

In Latin America, premium results should reflect a decline in annuity sales in Chile, partly offset by higher sales in Brazil and Mexico.

Moreover, the continuingperiod of low interest rates and risk asset returns is likely to have put pressure on MetLife’s investment portfolio income, increased liabilities for claims and future benefits, and escalated the cost of risk transfer measures, thereby draining profit margins.

We note that the company’s net investment income declined in 2017 and 2018. Though the same was up 2.6% in 2019, low interest rate environment might have left net investment income stressed in the first quarter because of weak investment yields.

Share repurchases made by MetLife in the to-be-reported quarter are likely to have bolstered its bottom line.

Earnings Surprise History

The company boasts an impressive earnings surprise record. Its bottom line beat estimates in three of the last four quarters and missed in one, the positive surprise being 12.67%, on average. This is depicted in the chart below:

MetLife, Inc. Price and EPS Surprise

MetLife, Inc. Price and EPS Surprise
MetLife, Inc. Price and EPS Surprise

MetLife, Inc. price-eps-surprise | MetLife, Inc. Quote

Here is what our quantitative model predicts:

Our proven model predicts an earnings beat for MetLife this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter

Earnings ESP: MetLife has an Earnings ESP of +0.45%.

Zacks Rank: MetLife currently has a Zacks Rank #3.

Other Stocks to Consider

Some other stocks worth considering from the insurance industry with the perfect mix of elements to surpass estimates this reporting cycle are as follows:

Prudential Financial Inc. PRU has an Earnings ESP of +0.56% and a Zacks Rank of 3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Kemper Corp. KMPR has an Earnings ESP of +10.27% and a Zacks Rank #2.

Lincoln National Inc. LNC has an Earnings ESP of +0.56% and is Zacks #3 Ranked.

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Lincoln National Corporation (LNC) : Free Stock Analysis Report
 
Prudential Financial, Inc. (PRU) : Free Stock Analysis Report
 
MetLife, Inc. (MET) : Free Stock Analysis Report
 
Kemper Corporation (KMPR) : Free Stock Analysis Report
 
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Zacks Investment Research