Global multi-line insurer -
) is scheduled to release its first-quarter 2014 financial
results after the closing bell on Apr 30.
In the last reported fourth-quarter 2013, the company
delivered a positive earnings surprise of 5.4%, while the
four-quarter trailing average beat is pegged at 6.5%. Let's see
how things are shaping up for this announcement.
Factors that Seek Attention
The announcement of dividend hike along with retention of
stable financial ratings appears to have failed to gather any
momentum just ahead of the earnings release. Moreover, the risk
of being acknowledged as a systemically important financial
institution (SIFI) could again put MetLife under the Federal
Reserve's supervision and further pose hindrances in the
completion of the previously targeted share repurchases.
Hence, the long-term outlook also appears cautious amid
challenging interest rates, currency fluctuations, higher
competition and regulatory challenges. Along with sluggish
investment returns, a significant decline in variable annuities
in the last couple of years have taken a toll on the financials,
with further sales reduction expected in 2014 as well.
Nonetheless, a modest financial leverage of below 30% is
consistent with the maintenance of a capital position that
remains sturdiest in the industry. MetLife is also cushioned by a
diversified portfolio mix and a leading brand.
Alongside, fundamental growth is shaping up with consistent
focus on international growth. The company's international
revenue share shored up from 14% of the total in 2010 to about
24% in 2013. The recent Provida acquisition will likely inflate
the company's operating earnings contribution from emerging
markets to 17% from current 14%. Further, the company is on track
to achieve $600 million in net pre-tax expense savings from
technology efficiencies by 2015.
Our proven model shows that MetLife is unlikely to beat
earnings as it lacks the required combination of two key
: MetLife has a negative Zacks ESP. That is because Expected
Surprise Prediction or
, which represents the difference between the Most Accurate
estimate of $1.38 per share and the Zacks Consensus Estimate of
$1.40, is -1.43%.
: MetLife has a Zacks Rank #4 (Sell). Note that stocks with Zacks
Rank #1, 2 and 3 have significantly higher chances of beating
earnings. Sell-rated stocks (#4 and 5) are kept under the radar
and are never considered going into the earnings
The combination of MetLife's Zacks Rank #4 and -1.43% ESP
deter us from being confident of an earnings beat on Apr 30.
Other Stocks to Consider
Here are some other companies you may want to consider as our
model shows they have the right combination of elements to post
an earnings beat this coming quarter:
Everest Re Group Ltd.
) ,earnings ESP of +7.85% and a Zacks Rank #1 (Strong Buy).
RenaissanceRe Holdings Ltd.
), earnings ESP of +3.15% and a Zacks Rank #1.
American International Group Inc.
), earnings ESP of +0.9% and a Zacks Rank #3 (Hold).
AMER INTL GRP (AIG): Free Stock Analysis
METLIFE INC (MET): Free Stock Analysis Report
EVEREST RE LTD (RE): Free Stock Analysis
RENAISSANCERE (RNR): Free Stock Analysis
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