Global multi-line insurer – MetLife Inc. (MET) is scheduled to release its third-quarter 2014 financial results after the closing bell on Oct 29.
In the last quarter, the company delivered a negative earnings surprise of 1.4%, although the four-quarter trailing average beat is pegged at 0.1%. Let us see how things are shaping up for this announcement.
Earnings Whispers?
Our proven model shows that MetLife is not likely to beat earnings as it lacks the required combination of two key components.
Zacks ESP: MetLife has a negative Zacks ESP. That is because Expected Surprise Prediction or Earnings ESP, which represents the difference between the Most Accurate estimate of $1.37 per share and the Zacks Consensus Estimate of $1.38, is -0.73%.
Zacks Rank: MetLife’s Zacks Rank #3 (Hold) increases the predictive power of ESP. However, we need to have a positive ESP to be confident about an earnings beat.
Sell-rated stocks (#4 and 5) should never be considered going into the earnings announcement, especially when the company is seeing negative estimate revisions momentum.
Factors that Warrant Attention
While MetLife is aggressively defending its position, therisk of being acknowledged as a systemically important financial institution (SIFI) is expected to put stringent capital, liquidity and leverage compliances on the company. Alongside, currency fluctuations, stiff competition and regulatory challenges threaten operating leverage.
Additionally, cash flow and variable annuities could still be weak in the third quarter owing to persistent pressure on spreads and investment yields from low interest rates. Meanwhile, lingering concerns from sluggishness in the U.S. and Japan may continue to hurt financials in the quarter.
However, we expect earnings per share to benefit from the share buyback program resumed in June this year. The company also has financial flexibility stemming from improved financial leverage and a strengthened capital position.
Furthermore, focused global expansion through acquisitions and strategic alliances along with a diversified portfolio and prudent underwriting has been enhancing MetLife’s brand value and asset base. The company also remained on track to achieve its targeted near-term cost synergies.
Other Stocks to Consider
Here are some other companies you may want to consider as our model shows they have the right combination of elements to post an earnings beat this quarter:
Endurance Specialty Holdings Ltd. (ENH) has Earnings ESP of +4.0% and a Zacks Rank #1 (Strong Buy).
Kemper Corp. (KMPR) has Earnings ESP of +13.3% and a Zacks Rank #2 (Buy).
Loews Corp. (L) has Earnings ESP of +10.5% and a Zacks Rank #3 (Hold).
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
To read this article on Zacks.com click here.
Get all Zacks Research Reports and be alerted to fast-breaking buy and sell opportunities every trading day.
Be the first to comment