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MetLife (MET) to Report Q3 Earnings: What's in the Cards?

MetLife Inc. MET is scheduled to report third-quarter 2017 results on Nov 1, after market close.

Last quarter, MetLife surpassed the Zacks Consensus Estimate by 1.6% and soared 57% year over year. Earnings benefited from volume growth, continued expense discipline and higher fees from improved equity markets.

The company has an impressive surprise history. It beat estimates in each of the last four quarters with an average positive surprise of 7.39%. This is depicted in the graph below:

MetLife, Inc. Price and EPS Surprise

Let’s see how things are shaping up for this announcement.

Q3 Flashback

MetLife’s third-quarter earnings should highlight the favorable impacts of equity markets and solid underwriting in the United States as well as continued focus on expense management.

We expect the company’s U.S. business segment to showcase a strong quarter of earnings and sales from Group Benefits, which is one of its largest growth engines. MetLife has a leading position in group benefits with a market share of 25% among the large employers. It is experiencing strong growth in the mid-market segment in this business.

The company witnessed continued strength in sales across all market segments, as well as in core and voluntary products in the first half of 2017. We also expect continued investments in this segment to bear fruit.

We expect the company’s Property and Casualty (P&C) segment to benefit from improvements in the auto insurance business. The company has been making targeted rate increases in auto insurance over the last past one year which continues this year too. These price increases, along with other management actions, will drive profitability in this line of business.

Overall, P&C sales may also benefit from price increases and management actions to drive value. Weather-related destruction in the months of August and September might also dent earnings from this segment, in the form of catastrophe loss.  

MetLife has been generating enough free cash flow which it uses for investment purposes and buying back shares. Repurchases made by the company in the third quarter will aid its bottom line.

We also expect to see an increase in variable investment income driven by favorable hedge fund performance and strong private equity. The company’s bottom line will be aided by its expense management initiatives.

Earnings Whispers

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

Zacks ESP: MetLife has an Earning ESP of 0.00%. This is because the Most Accurate estimate stands at 90 cents per share, in line with the Zacks Consensus Estimate. You can uncover the best stocks to buy or sell before they’re reported with our https://www.zacks.com/premium/esp-buy?adid=zp_article_espfil...">Earnings ESP Filter.

Zacks Rank: MetLife carries a Zacks Rank #3 but its 0.00% ESP makes our surprise prediction difficult.

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.

Stocks That Warrant a Look

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

Intercontinental Exchange Inc. ICE will report third-quarter 2017 earnings results on Nov 2. The company has an Earnings ESP of +0.19% and a Zacks Rank #3. You can see https://www.zacks.com/registration/premium/login/?continue_t...">the complete list of today’s Zacks #1 Rank stocks here.

Voya Financial, Inc. VOYA has an Earnings ESP of +1.02% and a Zacks Rank #3. The company is expected to report third-quarter earnings results on Oct 31.

Western Union Co. WU has an Earnings ESP of +1.51% and a Zacks Rank #3. The company is expected to report third-quarter earnings results on Nov 2.

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Voya Financial, Inc. (VOYA): Free Stock Analysis Report
 
MetLife, Inc. (MET): Free Stock Analysis Report
 
Intercontinental Exchange Inc. (ICE): Free Stock Analysis Report
 
Western Union Company (The) (WU): Free Stock Analysis Report
 
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