Why Manulife’s Star Is Ascending
Manulife Financial Corporation’s (MFC) shares have been a beacon of hope for investors, boasting an impressive 8.5% rally year-to-date. This surge outstrips the industry’s growth of 4.2%, the Finance sector’s 13.5% increase, and the S&P 500 Composite’s gain of 7.2%. With a market capitalization of $43.4 billion, and an average trading volume of 3.4 million shares over three months, Manulife stands tall among its peers.
The insurer, currently sporting a Zacks Rank #2 (Buy), owes its success to the robust performance of its Asia business, expanding Wealth and Asset Management segment, and solid capital position. With a track record of delivering earnings surprises in the last five quarters, Manulife has established itself as an industry leader.
The company’s Return on Equity (ROE) for the trailing 12 months stands at 16%, surpassing the industry average of 15.4%. This signifies Manulife’s adeptness in utilizing shareholders’ funds efficiently, aiming for a 13% ROE over the medium term.
Driving Growth
The future looks promising for Manulife, with the Zacks Consensus Estimate projecting earnings per share growth of 8.2% in 2024 and 9.7% in 2025. Additionally, the company targets core EPS growth between 10% and 12% over the medium term, buoyed by the relentless expansion of its Asia business.
Manulife’s strategic focus on the Asian market, aiming for it to contribute half of core earnings by 2025, positions it as a key player in long-term growth. Furthermore, the company’s ventures into the European market and investments in Wealth and Asset Management indicate a forward-looking stance.
A standout in the Canadian market, MFC is doubling down on high-potential businesses, aiming for two-thirds of core earnings from these ventures. Its strong capital deployment strategy, coupled with a focus on digital innovation, sets the stage for sustained growth.
Valuation and Potential
Trading at a price-to-book multiple of 1.39, below the industry average of 1.73, Manulife’s shares present an attractive valuation proposition. With a Value Score of A, the company’s stock holds potential for further appreciation before valuations expand.
Other Opportunities in the Insurance Sector
For investors eyeing alternatives, top-ranked stocks like American Equity Investment Life Holding (AEL), Primerica (PRI), and BRP Group (BRP) are worth considering. These industry players, with a Zacks Rank of 2, offer compelling investment avenues in the insurance space.
Final Thoughts
In a dynamic market environment, Manulife shines as a beacon of stability and growth potential. With a solid foundation, strategic business initiatives, and a prudent capital deployment strategy, the company is well-positioned to deliver long-term value to its investors.
