Here's Why Manulife (MFC) Shares are Investors' Favorite Now

Manulife Financial Corporation's
MFC shares have
rallied 8.5% year to date, outperforming the

industry's growth of 4.2%, the

Finance sector's increase of 13.5% and the S&P 500
Composite's gain of 7.2%. With a market capitalization of
$43.4 billion, the average volume of shares traded in the last
three months was 3.4 million.

The strength of its Asia business, expanding Wealth and Asset
Management business and solid capital position continue to drive
this currently Zacks Rank #2 (Buy) life insurer. The insurer
delivered an earnings surprise in the last five quarters.

Manulife's ROE for the trailing 12 months is 16%, better than
the industry's average of 15.4%. This reflects Manulife's
efficiency in utilizing shareholders' funds. It targets 13% ROE
over the medium term.

It has a
VGM
Score of B. The VGM Score rates a stock on its combined
weighted styles, helping to identify those with the most attractive
value, best growth and most promising momentum.

Image
Source: Zacks Investment Research

Growth Drivers

The Zacks Consensus Estimate for 2024 and 2025 earnings per
share (EPS) is $2.71 and $2.97, respectively, suggesting an
increase of 8.2% and 9.7%.

While earnings have grown 4.9% over the last five years,
outperforming the industry average of 2%, the long-term earnings
growth rate is currently pegged at 10%. Manulife targets core EPS
growth between 10% and 12% over the medium term.

Manulife targets the Asia business to account for half of the
company's core earnings by 2025 and play a crucial role in its
long-term growth. This business presently contributes significantly
to its earnings. Thus, the insurer is continually scaling up its
business across Asia. We believe MFC is well-poised to capitalize
on the growing opportunities of the Asia market by banking on its
strategic initiatives.

Manulife is expanding its Wealth and Asset Management
business and has identified Europe (and the wider EMEA market) as a
significant growth area. It is making long-term investments in this
region.

MFC, one of the three dominant life insurers within the
domestic Canadian market, has been accelerating growth in the
highest potential businesses and targets two-thirds of core
earnings from these businesses. Its inorganic growth is impressive
as this life insurer prudently deploys capital in high-growth, less
capital-intensive and higher-return businesses.

Manulife is continually building on its digital platform as
well as accelerating the adoption of new technologies such as
generative AI. This step is in tandem with the industry trend of
undergoing accelerated digitalization.

Banking on its sturdy capital position, MFC engages in
effective capital deployment. The company has increased its

dividend at a six-year CAGR of 10% and targets a 35-45%
dividend payout over the medium term.

MFC is strengthening its balance sheet and thus targets a
leverage ratio of 25%. Notably, its free cash flow conversion has
remained more than 100% over the last many quarters, reflecting its
solid earnings.

The Zacks Consensus Estimate for MFC's 2024 earnings has
moved 1.9% north in the past 30 days, reflecting analysts'
optimism.

Attractive Valuation

The company's shares are trading at a price-to-book multiple of
1.39, lower than the industry average of 1.73. Before valuation
expands, it is wise to take a position in the stock.

This insurer has a
Value
Score of A, reflecting an attractive valuation.

Other Stocks to Consider

Some other top-ranked stocks from the insurance space are
American Equity Investment Life Holding
AEL,
Primerica
PRI and
BRP Group
BRP, each
carrying a Zacks Rank of 2 at present. You can see


the complete list of today's Zacks #1 Rank (Strong Buy) stocks
here
.

American Equity delivered a trailing four-quarter average
earnings surprise of 21.72%. The stock has lost 0.4% year to
date. The Zacks Consensus Estimate for AEL's 2024 earnings
has moved 0.1% north in the past 30 days.

Primerica delivered a trailing four-quarter average earnings
surprise of 3.10%. The stock has surged 21% year to date. The
Zacks Consensus Estimate for PRI's 2024 and 2025 earnings translate
to 10.5% and 10% year-over-year increase, respectively.

BRP Group delivered a trailing four-quarter average earnings
surprise of 18.81%. The stock has risen 23.8% year to date.
The Zacks Consensus Estimate for BRP's 2024 and 2025 earnings
translate to 38.4% and 35.5% year-over-year increase,
respectively.

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Manulife Financial Corp (MFC): Free Stock Analysis Report

American Equity Investment Life Holding Company (AEL): Free Stock
Analysis Report

Primerica, Inc. (PRI): Free Stock Analysis Report

BRP Group, Inc. (BRP): Free Stock Analysis Report

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