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MetLife (MET) Q1 Earnings Beat Unlikely: Stock at Risk?

MetLife, Inc. MET is scheduled to report first-quarter 2016 results after the closing bell on May 4. In the last quarter, this company delivered a 9.56% negative earnings surprise. Let’s see how things are shaping up for this announcement.

Factors Influencing this Past Quarter

MetLife is expected to benefit from solid underwriting and an expanded portfolio. Prudent acquisitions and strategic alliances are likely to support results. Moreover, better rates in auto insurance should lead to loss ratio improvement in the to-be-reported quarter.

However, foreign currency volatility might weigh on results. Investment income may be hurt by the sustained soft interest rate level. Separation of the U.S. Retail business, which contributed nearly 20% of the company’s earnings, could also weigh on its performance.

Notably, in the last quarter, the insurer shed its Systemically Important Financial Institution (SIFI) status.

With respect to the surprise trend, MetLife surpassed expectations in two of the last four quarters, resulting in a negative average surprise of 14.78%.

The company’s share price has been fluctuating over the last few days. We wait to see how the stock reacts to the quarter’s results.

Earnings Whispers

Our proven model does not conclusively show that MetLife will beat the Zacks Consensus Estimate in the first quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy) or at least 2 (Buy) or 3 (Hold) for this to happen. But this is not the case here as elaborated below.

Zacks ESP: MetLife has -0.71% Earnings ESP. This is because the Most Accurate estimate stands at $1.39 while the Zacks Consensus Estimate is pegged higher at $1.40 per share.

Zacks Rank: MetLife has a Zacks Rank #3, which increases the predictive power of ESP. However, a negative ESP makes surprise prediction difficult.

The Sell-rated stocks (#4 or 5) should never be considered going into an earnings announcement.

Stocks to Consider

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. PRU has an Earnings ESP of +0.42% and a Zacks Rank #2. The company is scheduled to release first-quarter earnings results on May 4.

Lincoln National Corporation LNC has an Earnings ESP of +0.67% and a Zacks Rank #3. The company is scheduled to release first-quarter earnings results on May 4.

Physicians Realty Trust DOC has an Earnings ESP of +4.35% and a Zacks Rank #3. The company is scheduled to report its first-quarter earnings results on May 5.

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LINCOLN NATL-IN (LNC): Free Stock Analysis Report
 
METLIFE INC (MET): Free Stock Analysis Report
 
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PHYSICIANS RLTY (DOC): Free Stock Analysis Report
 
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