On Jul 23, 2013, we reiterated our recommendation on
) at Neutral based on the steady improvement in operations and
capital position, partially offset by higher competition and low
interest rates generating higher derivative losses.
Why the Retention?
Estimates for MetLife have remained steady since the company
reported its first-quarter 2013 results on May 1. The company's
respective earnings per share and revenues of $1.48 and $16.98
billion exceeded both the Zacks Consensus Estimate and the
Results reflected growth across MetLife's operating regions
along with expense control that also drove the return on equity
(ROE) and book value per share. These were partially offset by
higher derivative losses driven by the unfavorable impact of
foreign exchange rates and low interest rate.
Management also guided operating earnings growth to be in line
with 2012-levels, higher than prior estimate of (3%) to 4% over
2012, reflecting consistent focus on growth in emerging economies
amid difficult comps.
Following the release of the first-quarter results, the Zacks
Consensus Estimate for 2013 inched up 0.3% to $5.48 per share in
the last 60 days. However, the Zacks Consensus Estimate for 2014
remained intact at $5.70 a share. With the Zacks Consensus
Estimate for both 2013 and 2014 showing slight upward pressure on
the stock in the near term, the company now has a Zacks Rank #2
MetLife's capital position remains one of the sturdiest in the
industry, cushioned by a diversified portfolio mix and a leading
brand, as reflected by its strong book value growth and healthy
ratings. The successful divestiture of the banking operations
further enhanced operating leverage and aided dividend increment.
However, tepid-growth guidance for 2013 amid challenging interest
rates and competition raise caution. Overall, MetLife has the
potential to outperform the peer group once the economy regains
Other Financial Stocks That Warrant a Look
While we remain on the sidelines for MetLife, other stocks in
the insurance sector that are outperforming include
State Auto Financial Corp.
American Equity Investment Life Holding Co.
). All these stocks carry a Zacks Rank #1 (Strong Buy).
AMER EQUITY INV (AEL): Free Stock Analysis
METLIFE INC (MET): Free Stock Analysis Report
PROASSURANCE CP (PRA): Free Stock Analysis
STATE AUTO FINL (STFC): Free Stock Analysis
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