How Will Metlife (MET) Stock Be Affected By 'Systemically Important Financial Institution' Designation?

NEW YORK (TheStreet) -- Metlife Inc.  (MET) has reportedly moved closer to possible designation as a "systemically important financial institution," by a panel of top government officials, sources told the Wall Street Journal.

The Financial Stability Oversight Council, a panel created under the Dodd-Frank financial-system overhaul act, is expected to reveal as early as today that it has closed the evidentiary record it has been compiling on the New York insurer, the Journal said.

Treasury Secretary Jacob Lew leads the council. A spokeswoman for the U.S. Treasury declined to comment.

The closing of the record is a required step before the council can take a vote on MetLife's fate. The designation brings a firm under the thumb of the Federal Reserve and subjects it to stricter capital and other standards, which haven't been determined yet, the Journal noted.

Shares of Metlife are up 0.32% to $53.80.

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, compelling growth in net income, increase in stock price during the past year and largely solid financial position with reasonable debt levels by most measures. We feel these strengths outweigh the fact that the company shows weak operating cash flow."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • MET's revenue growth has slightly outpaced the industry average of 12.3%. Since the same quarter one year prior, revenues rose by 17.1%. 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 ($5.60 versus $2.91).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Insurance industry. The net income increased by 172.1% when compared to the same quarter one year prior, rising from $502.00 million to $1,366.00 million.
  • Compared to where it was 12 months ago, the stock is up, but it has so far lagged the appreciation in the S&P 500. Looking ahead, unless broad bear market conditions prevail, we still see more upside potential for this stock, despite the fact that it has already risen over the past year.
  • Despite currently having a low debt-to-equity ratio of 0.35, 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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