Why Is It Right To Retain Manulife Financial (MFC) Stock Now

Shares of Manulife Financial Corporation (NYSE:MFC) have soared 48.13% in the last one year, outperforming the Zacks categorized Life Insurance industry’s gain of 44.82%. We expect the stock to retain this momentum, courtesy a few good positives.

This Zacks Rank #3 (Hold) life insurer remains focused on developing its business in Asia, displaying a solid operational performance. Notably, the Asia business now contributes to one-third of the company’s earnings. Additionally, the division has been witnessing expansion in core earnings over the past few years, driven by an improved in-force business and a continued rise in new business volumes in Asia. Manulife Financial expects to maintain its hold over the Asian markets to drive its long-term growth.

Manulife Financial’s inorganic growth remains impressive with strategic acquisitions. These have not only added capabilities to its compelling portfolio but also expanded its geographic reach.

Further, the company continues to diversify its wealth and asset management business around the world. Notably, at the end of first-quarter 2017, the company achieved over $1 trillion in global assets under management and administration. Interestingly, this achievement was a milestone for the company as the whopping $1 trillion mark was never crossed earlier. Also, the company has been witnessing positive net flows over the last 29 quarters. Manulife expects to carry on with this positive trend in the near term.

However, core earnings at the Canadian division have been displaying a declining graph over a considerable period of time. The company anticipates the division’s core earnings to remain volatile in the near term due to decreasing group benefit sales.

This apart, the ongoing volatile global equity markets and low bond yields have been largely affecting the company’s capital position which might lead the stock to underperform.

Nonetheless, valuation is attractive at present as the stock is currently trading at a price to book multiple of 1.26, a massive 44.7% discount to the industry average of 2.28, in the last one year. Besides, the company has a trailing 12-month return on equity (ROE) of 10.6%, widely higher than the industry’s 7.1% average. Its expected long-term earnings growth is decently pegged at 10.20%.

Furthermore, Manulife Financial carries a VGM score of B. Here V stands for Value, G for Growth and M for Momentum and the score is a weighted combination of these three factors.

Stocks to Consider

Some better-ranked stocks from the insurance industry are Reinsurance Group of America, Incorporated (NYSE:RGA) , Cigna Corporation (NYSE:CI) and FBL Financial Group, Inc. (NYSE:FFG) . Each stock carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Reinsurance Group deals in reinsurance business. The company has delivered positive surprises in three of the last four quarters with an average beat of 5.08%.

Cigna provides insurance plus related products and services in the United States and internationally. The company has delivered positive surprises in three of the last four quarters with an average beat of 1.35%.

FBL Financial sells individual life insurance and annuity products. The company has delivered positive surprises in two of the last four quarters with an average beat of 1.98%.

Will You Make a Fortune on the Shift to Electric Cars?

Here's another stock idea to consider. Much like petroleum 150 years ago, lithium power may soon shake the world, creating millionaires and reshaping geo-politics. Soon electric vehicles (EVs) may be cheaper than gas guzzlers. Some are already reaching 265 miles on a single charge.

With battery prices plummeting and charging stations set to multiply, one company stands out as the #1 stock to buy according to Zacks research.

It's not the one you think.

See This Ticker Free >>