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MetLife (MET): Will Earnings Disappoint Again This Season?

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MetLife Inc.MET is set to report fourth-quarter 2015 financial results today, after the closing bell.

Last quarter, the company posted an earnings surprise of -57.8% while the average negative surprise for the trailing four quarters is 12.21%.

How will the company's earnings fare in this quarter? Let's find out.

Factors Influencing the Past Quarter

Fourth-quarter earnings will reflect numerous headwinds faced by the company in its different business segments. In Latin America, earnings might remain subdued due to weak regional economic growth, currency weakness and regulatory uncertainty.

MetLife faces challenges such as a strong U.S. dollar and regulatory changes in the Asia market. Also, in its Group, Voluntary & Worksite Benefits, Retail Life and Other segments the company expects operating earnings to decline due to changes to expense allocation and interest on capital.

In the last quarter, MetLife performed miserably, missing the earnings estimate by 57.8%. Foreign exchange, equity markets and interest rates were blamed for the dismal performance then, and we expect the same factors to be earnings dampeners in the fourth quarter too.

Moreover, MetLife's earnings will likely see the adverse effect of deteriorating net investment income, while revenues may feel the weight of weakened yields.

Nevertheless, global expansion through acquisitions and strategic alliances alongside a diversified portfolio and prudent underwriting should support MetLife's earnings. But will these be enough to pull off an earnings beat?

Earnings Whispers

Our proven model does not conclusively show that MetLife is likely to beat on earnings this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank of #1, 2 or 3 for this to happen. That is not the case here as you will see below.

Zacks ESP: MetLife has an Earnings ESP of -1.47%. This is because the Most Accurate estimate stands at $1.34 while the Zacks Consensus Estimate is pegged higher at $1.36.

Zacks Rank: MetLife carries a Zacks Rank #4 (Sell). We caution against Sell-rated stocks (#4 or 5) going into an earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks That Warrant a Look

Here are some companies you may want to consider as these have the right combination of elements to post an earnings beat this quarter:

Aspen Insurance Holdings Ltd. AHL with an Earnings ESP of +7.97% and a Zacks Rank #3 (Hold). The company is scheduled to release fourth-quarter earnings results on Feb 4.

PartnerRe Ltd. PRE with an Earnings ESP of +8.94% and a Zacks Rank #1 (Strong Buy). The company is scheduled to release fourth-quarter earnings results on Feb 8.

Arch Capital Group Ltd. ACGL with an Earnings ESP of +1.85% and a Zacks Rank #3. The company is scheduled to release fourth-quarter earnings results on Feb 9.

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Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

METLIFE INC (MET): Free Stock Analysis Report

PARTNERRE LTD (PRE): Free Stock Analysis Report

ARCH CAP GP LTD (ACGL): Free Stock Analysis Report

ASPEN INS HLDGS (AHL): Free Stock Analysis Report

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


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

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