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Will Lower Premiums Affect MetLife's (MET) Q1 Earnings?

MetLife, Inc. MET is set to report its first-quarter 2023 results on May 3, after the closing bell.

What Do the Estimates Say?

The Zacks Consensus Estimate for first-quarter earnings per share of $1.90 has declined by a penny in the past week. The estimated figure suggests a decrease of 8.7% from the prior-year reported number. Our estimate of $1.85 per share indicates an 11.1% year-over-year decrease. Also, the consensus estimate for first-quarter revenues of $17 billion indicates a 4.4% fall from the year-ago reported figure, whereas our estimate suggests an 8% decline.

MetLife’s earnings beat the consensus estimate in three of the prior four quarters and missed once, with the average surprise being 12.1%. This is depicted in the graph below:

MetLife, Inc. Price and EPS Surprise

MetLife, Inc. Price and EPS Surprise
MetLife, Inc. Price and EPS Surprise

MetLife, Inc. price-eps-surprise | MetLife, Inc. Quote

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Before we get into what to expect for the to-be-reported quarter in detail, it’s worth taking a look at MET’s previous-quarter performance first.

Q4 Earnings Rewind

In the last reported quarter, the leading insurance-based global financial services company reported adjusted operating earnings per share of $1.55, missing the Zacks Consensus Estimate by 10.9% due to reduced private equity returns. Lower investment income affected important metrics despite a rising interest rate environment.

Reduced profit levels from Asia and MetLife Holdings businesses in the fourth quarter were concerning. The negatives were partially offset by lower expenses, volume growth across some segments and improved contributions from the U.S. and Latin America businesses.

Now let’s see how things have shaped up prior to the first-quarter earnings announcement.

Q1 Factors to Note

Reduced premiums are likely to have affected MetLife’s first-quarter results. The Zacks Consensus Estimate for premiums for the quarter under review suggests a fall of 3.8% from the prior-year quarter, whereas our estimate indicates a 3.7% decline.

Also, the consensus mark for Universal Life and Investment-Type Product Policy Fees for the first quarter indicates a 5.2% year-over-year decrease, whereas our estimate suggests a 9.6% fall. Rising costs and expenses are likely to have affected the company’s profit levels in the to-be-reported quarter.

The company is expected to have witnessed lower profits from Retirement & Income Solutions and MetLife Holdings businesses in the first quarter. Further, the Zacks Consensus Estimate for adjusted earnings in Asia indicates a 35.1% plunge from the prior-year period, whereas our estimate predicts a 32.3% decline. These are likely to have led to a year-over-year decline in profits, making an earnings beat uncertain.

However, the consensus mark for net investment income indicates a 6.1% year-over-year increase from the year-ago period. The Zacks Consensus Estimate for MET’s U.S. business’ adjusted earnings suggests an increase of 20.2% from the prior-year quarter’s reading.

The consensus mark for adjusted earnings in Latin America indicates a jump of 25.2% from the year-ago period’s actuals. These are expected to have partially offset the negatives in the quarter under review.

Earnings Whispers

Our proven model does not conclusively predict an earnings beat for MetLife this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. That is not the case here, as you will see below.

Earnings ESP: The company has an Earnings ESP of -0.71%. The Most Accurate Estimate is currently pegged at $1.89 per share, lower than the Zacks Consensus Estimate of $1.90. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: MetLife currently carries a Zacks Rank #3.

Stocks to Consider

While an earnings beat looks uncertain for MetLife, here are some companies in the broader Finance space that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this time around:

Unum Group UNM has an Earnings ESP of +0.30% and a Zacks Rank of 1. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for UNM’s bottom line for the to-be-reported quarter is pegged at $1.65 per share, suggesting a 21.3% jump from the year-ago figure. Unum beat earnings estimates in three of the past four quarters and missed once, with an average surprise of 32.3%.

Owl Rock Capital Corporation ORCC has an Earnings ESP of +0.47% and is a Zacks #2 Ranked player.

The Zacks Consensus Estimate for Owl Rock Capital’s bottom line for the to-be-reported quarter is pegged at 43 cents per share, implying a 38.7% jump from the year-ago figure. ORCC beat earnings estimates in three of the past four quarters and missed once, with an average surprise of 2.1%.

RenaissanceRe Holdings Ltd. RNR has an Earnings ESP of +3.37% and a Zacks Rank of 3.

The Zacks Consensus Estimate for RenaissanceRe’s bottom line for the to-be-reported quarter is pegged at $7.34 per share, suggesting a 109.7% year-over-year increase. RNR beat earnings estimates in two of the past four quarters and missed on the other two occasions.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

MetLife, Inc. (MET) : Free Stock Analysis Report

RenaissanceRe Holdings Ltd. (RNR) : Free Stock Analysis Report

Unum Group (UNM) : Free Stock Analysis Report

Owl Rock Capital Corporation (ORCC) : Free Stock Analysis Report

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