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Why Is MetLife (MET) Down 1.9% Since the Last Earnings Report?

It has been about a month since the last earnings report for MetLife, Inc. (MET. Shares have lost about 1.9% in that time frame, underperforming the market.

Will the recent negative trend continue leading up to the stock's next earnings release, or is it due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.

MetLife Q1 Earnings & Revenues Top Estimates, Grow Y/Y

MetLife, Inc.’s first-quarter 2017 earnings of $1.46 per share beat the Zacks Consensus Estimate by 14.96% and were up 12.3% year over year.

Earnings benefited from volume growth, continued expense discipline and higher fees from improved equity markets.

The company generated operating revenues of $16.9 billion, up 2% year over year and ahead of the Zacks Consensus Estimate of $16.78 billion. MetLife’s operating premiums, fees and other revenues remained unchanged year over year both on a reported basis as well as on constant currency basis at $11.9 billion.

Net investment income increased 14% year over year to $5.2 billion.
In the reported quarter, the company’s total operating expenses decreased 0.4% year over year to $15.45 billion.

Segment Details

U.S.

Operating earnings in this segment increased 24% year over year to $503 million, led by higher variable investment income, lower expenses and volume growth. Operating premiums, fees & other revenues increased 3% to $5.7 billion.

Asia

Operating earnings were down 3% (or 5% on a constant currency basis) year over year to $295 million due to a tax-related item in Japan, partly offset by volume growth and lower expenses. Operating premiums, fees & other revenues in Asia increased 3% (1% on a constant currency basis) to $2.1 billion.

Latin America

Operating earnings were $143 million, down 5% (unchanged on a constant currency basis) year over year. Earnings suffered from higher claim volumes in the quarter and the impact of an assumption change in the company’s Chile pension business. Operating premiums, fees & other revenues were $916 million, up 5% (6% on a constant currency basis).

EMEA

Operating earnings from EMEA increased 19% (or 34% on constant currency basis) year over year to $75 million, primarily led by favorable expense margins and higher business volume. Operating premiums, fees & other revenues were $614 million, almost unchanged from the prior-year period and up 5% on a constant currency basis, driven by driven by growth in Turkey, as well as in employee benefits in the United Kingdom and Egypt.

MetLife Holdings

Operating earnings from MetLife Holdings came in at $385 million, up 44% year over year. Operating premiums, fees & other revenues were $1.5 billion, down 8% primarily due to the sale of MetLife Premier Client Group.

Brighthouse Financial

Brighthouse Financial reported operating earnings of $244 million, down 25% year over year, due to separation activities with MetLife Holdings. Operating premiums, fees & other revenues decreased 15.4% year over year to $1.1 billion, due to lower annuity and life insurance sales.

Investment & Financial Update

In the reported quarter, net investment income increased 6% year over year to $5 billion. Variable investment income increased over twofold to $343 million from $165 million in the year-ago quarter driven by the strong performance of private equity and hedge fund investments.

How Have Estimates Been Moving Since Then?

It turns out, fresh estimates have trended downward during the past month. There has been one revision lower for the current quarter.

MetLife, Inc. Price and Consensus

 

MetLife, Inc. Price and Consensus | MetLife, Inc. Quote

VGM Scores

At this time, MetLife's stock has a subpar Growth Score of 'D', however its Momentum is doing a lot better with an 'A'. Following the exact same course, the stock was allocated also a grade of 'A' on the value side, putting it in the top quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of 'B'. If you aren't focused on one strategy, this score is the one you should be interested in.

Zacks' style scores indicate that the company's stock is suitable for value and momentum investors.

Outlook

Estimates have been broadly trending downward for the stock. The magnitude of this revision also indicates a downward shift. Notably, the stock has a Zacks Rank #3 (Hold). We are expecting an inline return from the stock in the next few months.


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