NEW YORK (TheStreet) -- MetLife's (MET) outlook was upgraded to "stable" from "negative" by Moody's (MCO) in a report published late Thursday afternoon. The firm also affirmed the insurer's A3 credit rating.
Moody's cited improvement by the economy and the expectation of rising interest rates as a reason for the upgrade.
MetLife shares closed up 0.5% to $53.92.
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"As the largest US life insurance company with an excellent, well diversified business profile and good financial profile supported by diversified sources of earnings, the improving environment is expected to bolster MetLife's profitability and earnings and coverage metrics, which had been constrained by low interest rates, volatile equity markets and weak economic growth,." Moody's said.
"Over the past year, positive momentum has been attained at the company in lowering risk related to variable annuity guaranteed benefits, improving capital transparency relating to its 'onshoring' of its captive insurers. and shifting away from higher risk and capital intensive products in favor of fee-based and protection businesses," Moody's added.
Separately, TheStreet Ratings team rates METLIFE INC as a Buy with a ratings score of A-. TheStreet Ratings Team has this to say about their recommendation:
"We rate METLIFE INC (MET) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its revenue growth, impressive record of earnings per share growth, good cash flow from operations, solid stock price performance and largely solid financial position with reasonable debt levels by most measures. We feel these strengths outweigh the fact that the company shows low profit margins."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The revenue growth came in higher than the industry average of 13.6%. Since the same quarter one year prior, revenues slightly increased by 6.5%. Growth in the company's revenue appears to have helped boost the earnings per share.
- METLIFE INC 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. We feel that this trend should continue. During the past fiscal year, METLIFE INC increased its bottom line by earning $2.91 versus $1.09 in the prior year. This year, the market expects an improvement in earnings ($5.71 versus $2.91).
- Net operating cash flow has significantly increased by 228.36% to $6,147.00 million when compared to the same quarter last year. In addition, METLIFE INC has also vastly surpassed the industry average cash flow growth rate of 22.05%.
- Powered by its strong earnings growth of 1183.33% and other important driving factors, this stock has surged by 37.21% over the past year, outperforming the rise in the S&P 500 Index during the same period. We feel that the stock's sharp appreciation over the last year has driven it to a price level which is now somewhat expensive compared to the rest of its industry. The other strengths this company shows, however, justify the higher price levels.
- Despite currently having a low debt-to-equity ratio of 0.43, it is higher than that of the industry average, inferring that management of debt levels may need to be evaluated further.
- You can view the full analysis from the report here: MET Ratings Report
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