Manulife Financial Corporation Stock Downgraded (MFC)

NEW YORK ( TheStreet) -- Manulife Financial Corporation (NYSE: MFC) has been downgraded by TheStreet Ratings from hold to sell. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, disappointing return on equity, poor profit margins and generally disappointing historical performance in the stock itself.

Highlights from the ratings report include:
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Insurance industry. The net income has significantly decreased by 161.2% when compared to the same quarter one year ago, falling from $490.00 million to -$300.00 million.
  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. 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.
  • The gross profit margin for MANULIFE FINANCIAL CORP is currently extremely low, coming in at 8.60%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -2.70% is significantly below that of the industry average.
  • The share price of MANULIFE FINANCIAL CORP has not done very well: it is down 18.34% and has underperformed the S&P 500, in part reflecting the company's sharply declining earnings per share when compared to the year-earlier quarter. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.
  • MANULIFE FINANCIAL CORP has exprienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. This company has not demonstrated a clear trend in earnings over the past two years, making it difficult to accurately predict earnings for the coming 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.

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 99.5, above the average insurance industry P/E ratio of 77.3 and above the S&P 500 P/E ratio of 17.7. Manulife Financial has a market cap of $19.87 billion and is part of the financial sector and insurance industry. Shares are up 3.1% year to date as of the close of trading on Friday.

You can view the full Manulife Financial Ratings Report or get investment ideas from our investment research center.

-- Written by a member of TheStreet Ratings Staff

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.
null

If you liked this article you might like

Insurer Manulife Is Considering Spinoff or IPO for John Hancock Unit

Bullish and Bearish Reversals for This Week

10 High-Dividend Stocks for Safe Retirement Income

How Will Manulife Financial (MFC) Stock React to Thursday’s Q2 Results?

Best 3 Yielding Buy-Rated Stocks: TEP, SRC, MFC