Rating Change #1
Manulife Financial Corporation
(MFC - Get Report)
has been upgraded by TheStreet Ratings from sell to hold. The company's strengths can be seen in multiple areas, such as its increase in net income, reasonable valuation levels and growth in earnings per share. However, as a counter to these strengths, we also find weaknesses including disappointing return on equity, poor profit margins and a generally disappointing performance in the stock itself.
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Highlights from the ratings report include:
- The company, on the basis of net income growth from the same quarter one year ago, has significantly outperformed against the S&P 500 and exceeded that of the Insurance industry average. The net income increased by 82.2% when compared to the same quarter one year prior, rising from -$1,277.00 million to -$227.00 million.
- MANULIFE FINANCIAL CORP reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past year. During the past fiscal year, MANULIFE FINANCIAL CORP turned its bottom line around by earning $0.01 versus -$0.27 in the prior year.
- The gross profit margin for MANULIFE FINANCIAL CORP is currently extremely low, coming in at 11.50%. Despite the low profit margin, it has increased significantly from the same period last year. Despite the mixed results of the gross profit margin, MFC's net profit margin of -3.10% significantly underperformed when compared to the industry average.
- Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. Compared to other companies in the Insurance industry and the overall market on the basis of return on equity, MANULIFE FINANCIAL CORP underperformed against that of the industry average and is significantly less than that of the S&P 500.
Manulife Financial Corporation, together with its subsidiaries, provides financial protection and wealth management products and services to individuals and group customers primarily in Asia, Canada, and the United States. The company has a P/E ratio of -40.3, below the S&P 500 P/E ratio of 17.7. Manulife Financial has a market cap of $22 billion and is part of the financial sector and insurance industry. Shares are up 13.7% year to date as of the close of trading on Friday.
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-- Reported by Kevin Baker in Palm Beach Gardens, Fla.
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Editor's Note: TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model.