MetLife, Inc. The MET appears to be having better days as the economy improves and the pandemic recedes.
The company’s earnings estimates for 2021 and 2022 have been revised up by 3.2% and 0.6% in the past 60 days.
The stock currently has a Zacks Rank # 2 (Buy) and Value Score of A. It has been proven time and time again that a Zacks Rank # 1 (Fort Buy) or 2 with a strong Value Score of A or B provides better returns on investment. You can see The full list of today’s Zacks # 1 Rank stocks here.
What’s in store for MetLlife?
After suffering from declining revenues and high claims, things are now looking up for this multi-line insurer.
Q1 2021 revenues increased 8% after falling 1% in 2020. The case for revenue growth looks strong for the insurer, as the scenario of better employment is expected to boost earnings. sales of its group insurance business. A glimpse of the same was seen in the March quarter, with group insurance sales increasing 45% year over year. Management also commented that the company is on track to achieve a period of record sales in 2021.
Its underwriting margins will also see some respite from the surge in claims caused by COVID. As vaccination rolls out, claims are expected to decrease, which will improve margins.
The company also manages its investment income well. For insurers, low interest rates are a pain because they invest the premium received and earn investment income. But MetLife is navigating this low interest environment with its strong private equity investment strategy. It is invested in domestic LBO funds, European LBOs and venture capital.
Its long-term strategy of streamlining its business by cutting non-core, low-performing businesses and focusing on the best-performing ones should pay off well. In recent years, MetLife has divested BrightHouse Financial, the UK wealth management business, the Hong Kong business and MetLife Auto & Home to Farmers Insurance.
MetLife’s strategy of diversifying through business acquisitions is also appreciated. Most recently, she acquired Versant Health, a leader in eye care, PetFirst, a pet insurance company, and Willing, a digital estate planning company.
Strong capital position and dividend: other attractions
MetLife’s strategic movements are supported by its strong capital position and strong cash generation capacity. It plans to generate around $ 20 billion in free cash flow over the five-year period from 2020 to 2024, an amount equal to over 40% of its current market capitalization.
Another attraction for its investor is its payment of dividends. Recently, the company increased its dividend by 4.3%. Over the past decade, the company’s dividend has experienced a 10% CAGR.
Share price return
Since the start of the year, the stock has risen by 27.2% compared to the industry8.5% growth. Other stocks in the same space, including FinanciÃ¨re Prudential inc. PRU, American International Group Inc. AIG and Hartford Financial Services Group, Inc. HIG also jumped 31.3%, 23.5% and 27%, respectively, during the same period.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.