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Aug 01, 2020

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.

 

Related Ticker: PRU

Momentum Indicator for PRU turns positive, indicating new upward trend

PRU saw its Momentum Indicator move above the 0 level on March 05, 2024. This is an indication that the stock could be shifting in to a new upward move. Traders may want to consider buying the stock or buying call options. Tickeron's A.I.dvisor looked at 86 similar instances where the indicator turned positive. In of the 86 cases, the stock moved higher in the following days. The odds of a move higher are at .

Price Prediction Chart

Technical Analysis (Indicators)

Bullish Trend Analysis

The Moving Average Convergence Divergence (MACD) for PRU just turned positive on March 06, 2024. Looking at past instances where PRU's MACD turned positive, the stock continued to rise in of 40 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 314 cases, the price rose further within the following month. The odds of a continued upward trend are .

The Aroon Indicator entered an Uptrend today. In of 275 cases where PRU Aroon's Indicator entered an Uptrend, the price rose further within the following month. The odds of a continued Uptrend are .

Bearish Trend Analysis

The 10-day RSI Indicator for PRU moved out of overbought territory on April 01, 2024. This could be a bearish sign for the stock. Traders may want to consider selling the stock or buying put options. Tickeron's A.I.dvisor looked at 36 similar instances where the indicator moved out of overbought territory. In of the 36 cases, the stock moved lower in the following days. This puts the odds of a move lower at .

The Stochastic Oscillator demonstrated that the ticker has stayed in the overbought zone for 16 days. The longer the ticker stays in the overbought zone, the sooner a price pull-back is expected.

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 .

PRU broke above its upper Bollinger Band on March 06, 2024. This could be a sign that the stock is set to drop as the stock moves back below the upper band and toward the middle band. You may want to consider selling the stock or exploring put options.

Fundamental Analysis (Ratings)

Fear & Greed

The Tickeron Price Growth Rating for this company is (best 1 - 100 worst), indicating outstanding price growth. PRU’s price grows at a higher rate over the last 12 months as compared to S&P 500 index constituents.

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 (1.371). P/E Ratio (17.254) is within average values for comparable stocks, (35.985). Projected Growth (PEG Ratio) (0.456) is also within normal values, averaging (0.677). Dividend Yield (0.043) settles around the average of (0.037) among similar stocks. P/S Ratio (0.781) is also within normal values, averaging (2.027).

The Tickeron Profit vs. Risk Rating rating for this company is (best 1 - 100 worst), indicating well-balanced risk and returns. The average Profit vs. Risk Rating rating for the industry is 80, placing this stock slightly better than average.

The Tickeron PE Growth Rating for this company is (best 1 - 100 worst), pointing to worse than average 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.

Notable companies

The most notable companies in this group are MetLife (NYSE:MET), Prudential Financial (NYSE:PRU), Lincoln National Corp (NYSE:LNC), Genworth Financial (NYSE:GNW).

Industry description

Life insurance companies mainly sell policies that pay a death benefit as a lump sum upon the death of the insured to their beneficiaries. Life insurance policies may be sold as term life, (which guarantees payment of a stated death benefit and expires at the end of a specified term) or permanent /typically whole life (which is more expensive but lasts a lifetime and carries a cash accumulation component). Life insurance firms may also sell long-term disability policies that help to replace the insured individual’s income if they become sick or disabled. Health insurance, on the other hand, helps pay for medical expenses. Anthem, Inc., MetLife, Inc. and Aflac Incorporated are some of the largest U.S. companies in this industry.

Market Cap

The average market capitalization across the Life/Health Insurance Industry is 21.24B. The market cap for tickers in the group ranges from 228.36K to 133.31B. PNGAY holds the highest valuation in this group at 133.31B. The lowest valued company is GWGHQ at 228.36K.

High and low price notable news

The average weekly price growth across all stocks in the Life/Health Insurance Industry was 0%. For the same Industry, the average monthly price growth was 1%, and the average quarterly price growth was 8%. CILJF experienced the highest price growth at 9%, while ODMUF experienced the biggest fall at -4%.

Volume

The average weekly volume growth across all stocks in the Life/Health Insurance Industry was -37%. For the same stocks of the Industry, the average monthly volume growth was -15% and the average quarterly volume growth was -19%

Fundamental Analysis Ratings

The average fundamental analysis ratings, where 1 is best and 100 is worst, are as follows

Valuation Rating: 47
P/E Growth Rating: 54
Price Growth Rating: 48
SMR Rating: 90
Profit Risk Rating: 80
Seasonality Score: -5 (-100 ... +100)
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PRUDaily Signal changed days agoGain/Loss if shorted
 
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General Information

a financial conglomerate

Industry LifeHealthInsurance

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Fundamentals
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Industry
Financial Conglomerates
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40658
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https://www.investor.prudential.com
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