Dropping 5% Since The Start Of 2023, Can MetLife Stock Rebound?

MetLife’s stock (NYSE: MET) has lost 5% since the start of 2023 as compared to the 26% rise in the S&P500 index over the same period. Further, at its current price of $69 per share, it is trading 12% below its fair value of $79 – Trefis’ estimate for MetLife’s valuation

Amid the current financial backdrop, MET stock has seen extremely strong gains of 55% from levels of $45 in early January 2021 to around $70 now, vs. an increase of about 30% for the S&P 500 over this roughly 3-year period. However, the increase in MET stock has been far from consistent. Returns for the stock were 33% in 2021, 16% in 2022, and -9% in 2023. In comparison, returns for the S&P 500 have been 27% in 2021, -19% in 2022, and 24% in 2023 – indicating that MET underperformed the S&P in 2023. In fact, consistently beating the S&P 500 – in good times and bad – has been difficult over recent years for individual stocks; for heavyweights in the Financials sector including V, JPM, and MA, and even for the megacap stars GOOG, TSLA, and MSFT. In contrast, the Trefis High Quality (HQ) Portfolio, with a collection of 30 stocks, has outperformed the S&P 500 each year over the same period. Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index; less of a roller-coaster ride as evident in HQ Portfolio performance metrics. Given the current uncertain macroeconomic environment with high oil prices and elevated interest rates, could MET face a similar situation as it did in 2023 and underperform the S&P over the next 12 months – or will it see a strong jump?

The insurance giant surpassed the revenue expectations in Q3 FY 2023, while earnings failed to meet the consensus. It reported total revenues of $15.9 billion, which was 29% below the year-ago period. It was primarily because of a 35% decrease in the total premiums figure, coupled with a jump in net derivative losses (from -$226 million to -$1.2 billion). That said, the negative impact was somewhat offset by a 35% growth in the net investment income. On the cost front, the expenses figure increased in the quarter, resulting in an adjusted net income of $422 million – down 61% y-o-y.

The company’s top line declined 10% y-o-y to $47.9 billion in the first three quarters of FY 2023. It was mainly due to lower premiums and an increase in net investment losses. Further, the total expenses as a % of revenues witnessed an unfavorable rise over the same period. Altogether, it resulted in a 77% y-o-y drop in the adjusted net income. 

Moving forward, we expect the same trend to continue in Q4 results. Further, Q4 consensus estimates for revenues and earnings are $18.46 billion and $1.90 respectively. Overall, MetLife revenues are estimated to remain around $71.36 billion in FY2023. Further, the annual GAAP EPS is likely to touch $7.42. This coupled with a P/E multiple of just below 11x will lead to a valuation of $79.

 Returns Jan 2024
MTD [1]
Since start
of 2023 [1]
Total [2]
 MET Return 4% -5% 40%
 S&P 500 Return 1% 26% 116%
 Trefis Reinforced Value Portfolio -1% 37% 604%

[1] Returns as of 1/22/2024
[2] Cumulative total returns since the end of 2016

Invest with Trefis Market-Beating Portfolios
See all Trefis Price Estimates

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

More Related Articles

Info icon

This data feed is not available at this time.

Sign up for Smart Investing to get the latest news, strategies and tips to help you invest smarter.