A month has gone by since the last earnings report for Manulife Financial (MFC). Shares have added about 17% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Manulife due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Manulife's Q1 Earnings and Premium Sales Decline Y/Y
Manulife delivered first-quarter 2020 core earnings of $0.8 billion (C$1.02 billion), down 34% year over year. This downside can be attributed to unfavorable impact of markets on seed money investments in new segregated funds and mutual funds, the absence of core investment gains in the quarter, lower new business volumes in Japan and unfavorable policyholder experience in North America, including unfavorable travel claims related to COVID-19.
New business value in the reported quarter was $0.4 billion (C$0.5 billion), down 11% year over year due to lower sales in Asia.
Annualized premium equivalent (APE) sales decreased 9% year over year to $1.2 billion (C$1.6 billion) on lower sales in Asia and United States.
As of Mar 31, 2020, Manulife Financial’s financial leverage ratio deteriorated 210 basis points (bps) to 23% from the level on Dec 31, 2019.
As of Mar 31, 2020, wealth and asset management assets under management and administration were $450.7 billion (C$636.2 billion), down 2.9% year over year.
Core return on equity, measuring the company’s profitability, was 8.2%.
The Office of the Superintendent of Financial Institutions' new Life Insurance Capital Adequacy Test (LICAT) regulatory capital regime came into effect in Canada on Jan 1, 2018, replacing the Minimum Continuing Capital and Surplus framework. LICAT ratio was 155% as of Mar 31, 2020, down from 140% as of Dec 31, 2019.
Global Wealth and Asset Management division’s core earnings came in at $188.6 million (C$253 million), up 7.3% year over year.
Asia division’s core earnings totaled $366 million (C$491 million), down 5.6% year over year. APE sales declined 18.9% to $0.8 billion (C$1.1 billion).
Manulife Financial’s core earnings in Canada division were $176.7 million (C$237 million), down 16.3% year over year. Annualized premium equivalent sales of $280.3 million (C$376 million) increased 44.1% year over year.
The U.S. division reported core earnings of $310.1 million (C$416 million), down 12.2% year over year. Annualized premium equivalents sales of $105.1 million (C$141 million) decreased 1.4% year over year.
The board of directors declared a dividend of 28 cents per share to be paid out on and after Jun 19, 2020 to its shareholders as of May 19.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates flatlined during the past month. The consensus estimate has shifted -10.97% due to these changes.
Currently, Manulife has an average Growth Score of C, though it is lagging a bit on the Momentum Score front with a D. However, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Manulife has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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