Manulife Financial (TSX: MFC) is a Toronto-based company that provides financial products and services in Asia, Canada, the United States, and in other locations around the world. Today, I want to discuss why I’m looking to snatch up shares of this stock in the final weeks of the winter season. Let’s jump in.
How has this stock performed over the past year?
Shares of Manulife have climbed 10% year over year as of close on March 3. The stock has jumped 12% so far in 2023. Investors who want to see more of its recent performance can play with the interactive price chart below.
Here’s why Manulife’s Asia presence is so exciting
The economies of East Asia have experienced incredible growth over the past several decades. China has become an economic powerhouse rivalling the United States. That has also bolstered the growth of the middle class in Asia. Back in 2021, Bloomberg reported that more than one billion Asians were set to join the global middle class by 2030 based on spending trends. This shift to a consumer economy also makes Asia a fantastic growth centre for companies like Manulife.
Insurers have reason to celebrate the growth of the middle class in Asia. ResearchAndMarkets recently projected that the global insurance market was set to grow from $5.37 billion in 2021 to $8.39 billion by 2026. That would represent a compound annual growth rate (CAGR) of 9.1%.
In its recent earnings report, Manulife revealed that its Asia in-force business posted double-digit growth for the full year. “The macro environment is being shaped by three megatrends,” said Chief Executive Officer Roy Gori. “The growth and emergence of the middle class in Asia, an aging population, and the digitization of the consumer.
Should investors be encouraged by its recent earnings?
This company unveiled its fourth quarter (Q4) and full year fiscal 2022 earnings on February 15. Manulife posted net income of $7.3 billion in 2022 — up $0.2 billion compared to the previous year. However, core earnings fell 7% to $6.2 billion.
In Q4, Manulife reported total new business value of $525 million — down from $555 million in Q4 FY2021. Moreover, core earnings rose to $569 million in its Asia segment, which was up from $547 million in the prior year.
On the business front, Manulife boasted that it was ahead of its competitors when it comes to its digitization strategy. Its Asia business took a hit in fiscal 2022 due to COVID-19 containment measures that governments in that part of the world have continued to pursue. However, it bolstered its digital capabilities in Asia with the launch of Manulife Shop in the Philippines in Q4. This allows customers to purchase insurance online.
Manulife: Why I’m buying today
Manulife stock currently possesses a very favourable price-to-earnings ratio of 7.4. This stock is in more attractive value territory compared to its industry peers. Moreover, the stock offers a quarterly dividend of $0.365 per share. That represents a strong 5.3% yield.
This stock offers great value, a nice dividend, and Manulife has a bright future, as the insurance and financial services industry is geared up for strong growth over the long term.
