What to Expect When Manulife Financial Corp. Reports Earnings This Week

Can Manulife Financial Corp. (TSX:MFC)(NYSE:MFC) deliver for shareholders this quarter?

| More on:
The Motley Fool

Manulife Financial Corp. (TSX: MFC)(NYSE: MFC) is scheduled to publish its quarterly earnings on Thursday. Following massive losses from the financial crisis, investors have mostly abandoned the life insurance company. However, after repairing its balance sheet and expanding operations overseas, Manulife has staged an impressive comeback. Now investors are looking for the next factor that could drive earnings.

Let’s take a look at what has been happening at Manulife over the past few months and what we’re likely to see in the upcoming report.

Stats on Manulife

Analyst EPS Estimate $0.40
Year-Ago EPS $0.31
Revenue Estimate $10.84B
Change From Year-Ago Revenue -8.80%
Earnings Beats in Past Four Quarters 0

Source: Yahoo! Finance

Can Manulife deliver for shareholders this quarter?

Analysts have been steadfast in their outlook for Manulife. Over the past few months the street has lowered its consensus earnings estimate for the upcoming quarter by a penny to $0.40 per-share. However, in spite of the restrained outlook the stock has managed to continue its rally, up 4.5% over the past three months.

Canadian life insurance companies like Manulife are generally regarded by investors as a rather sleepy but profitable industry. Unlike the United States, there isn’t too much competition. And despite its perception as a mature market, premium income continues to grow at a steady clip.

The storyline over the last few years is one in which insurance giants rode through the financial crisis and then cleaned up their balance sheets to minimize outsized exposure to falling equity prices and interest rates. The company’s expansion into new markets like Asia was impressive, but was generally overshadowed by its North American operations.

However, Manulife’s reputation as a boring, old Canadian lifeco is starting to change. The company has continued to build out its business in the fast growing emerging economies of Asia. Today, Manulife’s operations in emerging market like Indonesia, Malaysia, and Vietnam account for a larger percentage of the company’s earnings than Canada.

Manulife’s Asian expansion is good news for shareholders. Given that the stock is trading at only 12 times trailing earnings, the company is still being valued as a stodgy Canadian lifeco. However, exposure to rampant growth in emerging markets could endear the stock with a higher multiple in the years to come.

In Manulife’s upcoming report, watch the results from the company’s international operations closely. Manulife’s Asian business is not yet as efficient or profitable as of other top companies in the region.

However, the success of the company’s international operations will be the key determinant as to whether it can boost dividends or share buybacks and build on the comeback it has mounted over the past two years. Continued expansion in this region could be a huge upside catalyst for the stock.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Robert Baillieul has no position in any stocks mentioned.

More on Investing

Canadian Dollars
Stocks for Beginners

3 Stocks to Invest $30,000 in Right Now

Are you looking for some of the best stocks to invest in right now? Here's a trio that offer growth…

Read more »

Businessmen teamwork brainstorming meeting.
Dividend Stocks

1 Magnificent Dividend Stock Down 15% to Buy and Hold Forever

Enbridge is off the 12-month lows but still trades at a large discount to its 2022 high.

Read more »

Male IT Specialist Holds Laptop and Discusses Work with Female Server Technician. They're Standing in Data Center, Rack Server Cabinet with Cloud Server Icon and Visualization
Tech Stocks

Missed Out on NVIDIA? My Best Growth Stock Pick to Buy and Hold

A TSX growth stock is a top pick and profitable investment choice if you missed out on the ascent of…

Read more »

Increasing yield
Dividend Stocks

My Top 5 Ultra-High-Yield Dividend Stocks to Buy in May

If you’re looking to build a passive-income stream, these five dividend stocks should be on your radar.

Read more »

tsx today
Stock Market

TSX Today: What to Watch for in Stocks on Friday, May 24

The main TSX index seems on track to end the week in the red as it currently trades with 1.2%…

Read more »

consider the options
Bank Stocks

Is TD Bank Stock the Best Bank Stock for You?

TD Bank stock is reflecting a lot of the negative news. It remains a top bank stock trading at attractive…

Read more »

Payday ringed on a calendar
Dividend Stocks

A 10.6% Dividend Stock That Provides Monthly Cash Payments

A dividend stock with a mouth-watering yield providing monthly cash flow streams.

Read more »

Businessman holding AI cloud
Tech Stocks

Ready to Invest in Artificial Intelligence (AI)? 2 Stocks That Are Solid Bets

These two AI stocks provide investors with strong future opportunities as AI continues to become a part of our everyday…

Read more »