MetLife Inc. MET is set to report its first-quarter 2015 financial results on May 6, 2015 after the closing bell. Last quarter it posted a positive earnings surprise of +0.73%.
Let’s see how things are shaping up for this announcement.
Factors Affecting the Past Quarter
Metlife maintains a diversified business mix. The company expects to benefit from the annuity products along with a rebound for variable annuities from 2015. The company’s anticipation to increase the annuity sales by more than 50% is likely to drive the earnings growth in the upcoming quarter.
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 is also on track to achieve its targeted near-term cost synergies.
However, deteriorating net investment income and weakened yields are expected to weigh on the revenues of the company. Additionally, per the implementation of the Affordable Care Act, increasing annual fees on health insurers is likely to affect the company’s bottom line.
Moreover, challenging interest rates, currency fluctuations, and the receipt of the non-banking systemically important financial institution (SIFI) status – which puts the company under the Federal Reserve’s supervision and intensifying industry competition – are likely to affect the company’s financials adversely.
Earnings Whispers
Our proven model does not conclusively show that MetLife is likely to beat earnings this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank of #1, 2 or 3 for this to happen. That is not the case here as you will see below.
Zacks ESP: MetLife has a positive ESP of +2.13%. This is because the Most Accurate estimate stands at $1.44 while the Zacks Consensus Estimate is pegged lower at $1.41.
Zacks Rank: MetLife carries a Zacks Rank #4 (Sell). We caution against Sell-rated stocks (Zacks Rank #4 and #5) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Other Stocks That Warrant a Look
Here are some other financial companies which you may want to consider as our model shows that these have the right combination of elements to post an earnings beat this quarter:
RenaissanceRe Holdings Ltd. RNR has an earnings ESP of +0.81% and a Zacks Rank #2 (Buy).
American Capital, Ltd. ACAS has an earnings ESP of +10.00% and a Zacks Rank #2.
Manulife Financial Corp. MFC has an Earnings ESP of +2.94% and a Zacks Rank #2.
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