Life Insurers are Limping in to Their Earnings Reports, and the Fundamentals Aren’t Good
Life insurance companies mainly sell policies that pay a death benefit as a lump sum upon the death of the insured. Policies may be sold as term life which guarantees payment of a stated death benefit, but expires at the end of a specified term. They can also be sold as permanent or whole life policies. These policies are more expensive, but lasts a lifetime and carry a cash accumulation component. Life insurance firms may also sell long-term disability policies that help to replace the insured’s income if they become sick or disabled.
Over the last week the life insurance group has been one of the worst performing groups in terms of stock returns. We see on Tickeron’s Group Trends Screener that it’s within the worst seven performers with a loss of 3.19%. This probably isn’t what investors want to see with a number of members of the group getting ready to report earnings next week.
Prudential Financial (PRU) will report earnings on August 4. Manulife Financial (MFC) and Metlife (MET) will both report on August 5. Looking at a comparison of these three companies and their fundamental indicators, there isn’t much to be excited about.
All three companies get positive ratings for being undervalued, but the only other positive rating for any of them is a the outlook rating for Prudential. All of the other ratings are either neutral or negative. There are seven different categories and that gives us a total of 21 indicators. Out of 21 indicators, only four are positive. That’s not a very good percentage.
Personally I find it very concerning that all three stocks get the worst possible scores on the Profit Vs. Risk rating and the SMR rating. That is a major red flag for me when it comes to the long-term prospects for the stocks. Tickeron has a negative outlook on this group and predicts a further decline by more than 4.00% within the next month with a likelihood of 65%.
The technical analysis looks considerably better. You should keep in mind though that technical analysis tends to be more useful over the short-term. Tickeron’s technical analysis screener shows Metlife with five positive ratings and only one negative rating.
Prudential has four positive ratings and only two negative ratings. Manulife has only one positive rating and one negative rating.
The earnings estimates and the sentiment indicators for the three companies are very different in some areas and very similar in other areas. Metlife and Prudential have seen their consensus estimate get cut rather drastically over the last 90 days. For Metlife the EPS estimate was at $1.32 three months ago and is now at $0.90. Prudential’s EPS estimate was $2.65 and it’s now $1.71. Those are cuts of 31.8% and 35.5% respectively. We see that both of the companies are expected to earn considerably less than they did in the same period of 2019.
Manulife’s numbers are very different. We see that EPS estimate has been bumped up slightly, from $0.47 to $0.50, and the company is expected to earn more than it did last year.
As for the sentiment indicators, analysts have similar ratings on Metlife and Manulife with both buy percentages at 64%. Analysts are considerably more bearish on Prudential with a buy percentage of only 20%. Short sellers share a similar opinion with the short interest ratios for Metlife and Manulife in the same range while Prudential’s is higher.
The Tickeron Scorecard for these three stocks shows Metlife and Prudential each have “buy” ratings while Manulife has a “sell” rating. Those ratings are based primarily on the short-term outlook and the technical indicators. From a longer term perspective, I feel Manulife has the better outlook.
PRU in upward trend: price expected to rise as it breaks its lower Bollinger Band on March 10, 2025
PRU may jump back above the lower band and head toward the middle band. Traders may consider buying the stock or exploring call options. In of 37 cases where PRU's price broke its lower Bollinger Band, its price rose further in the following month. The odds of a continued upward trend are .
Technical Analysis (Indicators)
Bullish Trend Analysis
The Momentum Indicator moved above the 0 level on March 24, 2025. You may want to consider a long position or call options on PRU as a result. In of 96 past instances where the momentum indicator moved above 0, the stock continued to climb. The odds of a continued upward trend are .
The Moving Average Convergence Divergence (MACD) for PRU just turned positive on March 18, 2025. Looking at past instances where PRU's MACD turned positive, the stock continued to rise in of 43 cases over the following month. The odds of a continued upward trend are .
Following a 3-day Advance, the price is estimated to grow further. Considering data from situations where PRU advanced for three days, in of 344 cases, the price rose further within the following month. The odds of a continued upward trend are .
Bearish Trend Analysis
The Stochastic Oscillator may be shifting from an upward trend to a downward trend. In of 67 cases where PRU's Stochastic Oscillator exited the overbought zone, the price fell further within the following month. The odds of a continued downward trend are .
PRU moved below its 50-day moving average on March 28, 2025 date and that indicates a change from an upward trend to a downward trend.
Following a 3-day decline, the stock is projected to fall further. Considering past instances where PRU declined for three days, the price rose further in of 62 cases within the following month. The odds of a continued downward trend are .
The Aroon Indicator for PRU entered a downward trend on March 12, 2025. This could indicate a strong downward move is ahead for the stock. Traders may want to consider selling the stock or buying put options.
The Tickeron Profit vs. Risk Rating rating for this company is (best 1 - 100 worst), indicating low risk on high returns. The average Profit vs. Risk Rating rating for the industry is 73, placing this stock better than average.
The Tickeron Valuation Rating of (best 1 - 100 worst) indicates that the company is slightly undervalued in the industry. This rating compares market capitalization estimated by our proprietary formula with the current market capitalization. This rating is based on the following metrics, as compared to industry averages: P/B Ratio (1.502) is normal, around the industry mean (1.496). P/E Ratio (17.254) is within average values for comparable stocks, (39.438). Projected Growth (PEG Ratio) (0.456) is also within normal values, averaging (0.675). Dividend Yield (0.043) settles around the average of (0.124) among similar stocks. P/S Ratio (0.781) is also within normal values, averaging (2.172).
The Tickeron Seasonality Score of (best 1 - 100 worst) indicates that the company is fair valued in the industry. The Tickeron Seasonality score describes the variance of predictable price changes around the same period every calendar year. These changes can be tied to a specific month, quarter, holiday or vacation period, as well as a meteorological or growing season.
The Tickeron Price Growth Rating for this company is (best 1 - 100 worst), indicating fairly steady price growth. PRU’s price grows at a lower rate over the last 12 months as compared to S&P 500 index constituents.
The Tickeron PE Growth Rating for this company is (best 1 - 100 worst), pointing to consistent earnings growth. The PE Growth rating is based on a comparative analysis of stock PE ratio increase over the last 12 months compared against S&P 500 index constituents.
The Tickeron SMR rating for this company is (best 1 - 100 worst), indicating weak sales and an unprofitable business model. SMR (Sales, Margin, Return on Equity) rating is based on comparative analysis of weighted Sales, Income Margin and Return on Equity values compared against S&P 500 index constituents. The weighted SMR value is a proprietary formula developed by Tickeron and represents an overall profitability measure for a stock.
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a financial conglomerate
Industry LifeHealthInsurance