MetLife (MET): Will It Disappoint Again In Q2 Earnings?

MetLife Inc. (NYSE:MET) is set to report second-quarter 2016 financial results on Aug 3, after the closing bell.

Last quarter, it missed the estimate by 5.76% and the average miss for the trailing four quarters is 16.76%.

How will Metlife's earnings fare in this quarter? Let’s find out.

Factors Influencing the Past Quarter

Foreign exchange, equity markets and interest rates hurt results in the previous quarter and are likely to remain culprits this time too.

Moreover, MetLife's earnings will likely feel the adverse effect of deteriorating net investment income and weakened yields are expected to weigh on revenues. Variable investment income is also expected to decline due to weak hedge fund performance.

We expect a decline in operating earnings from Asia as the company is intentionally reducing sales of yen-denominated products by withdrawing single premium Accident and Health and Whole Life offerings in Japan.

Metlife's property and casualty segment might see improved results from auto insurance as a result of rate increases.

Nevertheless, global expansion through acquisitions and strategic alliances along with a diversified portfolio and prudent underwriting should support earnings.

Earnings Whispers

Our proven model does not conclusively show that MetLife is likely to beat on earnings this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank of #1, 2 or 3 for this to happen. That is not the case here as you will see below.

Zacks ESP: MetLife has an Earning ESP of -1.47%. This is because the Most Accurate estimate stands at $1.34 while the Zacks Consensus Estimate is pegged at $1.36.

Zacks Rank: MetLife carries a Zacks Rank #4 (Sell). We caution against Sell-rated stocks (Zacks Rank #4 or 5) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

METLIFE INC Price and EPS Surprise

Stocks That Warrant a Look

Here are some companies you may want to consider as these have the right combination of elements to post an earnings beat this quarter:

Prudential Financial, Inc. (NYSE:PRU) has an Earnings ESP of +0.40% and carries a Zacks Rank #3. The company is slated to report second-quarter earnings results on Aug 3.

Manulife Financial Corporation (NYSE:ALL) has an Earnings ESP of +2.94% and carries a Zacks Rank #3. The company is expected to report second-quarter earnings results on Aug 4.

Sun Life Financial Inc. (TO:SLF) has an Earnings ESP of +1.47% and carries a Zacks Rank #2. The company is expected to report second-quarter earnings results on Aug 10.

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