MetLife (MET) Down 21.7% Since Last Earnings Report: Can It Rebound?

A month has gone by since the last earnings report for MetLife (NYSE:MET). Shares have lost about 21.7% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is MetLife due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.

MetLife Q4 Earnings & Revenues Top Estimates, Rise Y/Y

MetLife, Inc.’s fourth-quarter 2019 operating earnings of $1.98 per share beat the Zacks Consensus Estimate by 41.4% and surged 46.7% year over year. Earnings gained from a rise in revenues.

Behind the Headlines

The company generated operating revenues of $18.2 billion, up 18% year over year, and surpassed the Zacks Consensus Estimate by 8.9%.
Adjusted premiums, fees & other revenues, excluding pension risk transfer, grew 24% year over year to $13.8 billion. Net investment income (adjusted) of $4.5 billion increased 3% year over year.

Total adjusted expenses of $16.5 million were up 19.6% year over year.

Book value per share was $48.97, up 9.7% year over year.

Tangible return on equity was 6.1%, down 1830 basis points year over year.

Quarterly Segment Details

United States

Adjusted earnings in this segment declined 1% year over year to $675 million due to unfavorable underwriting. Adjusted premiums, fees & other revenues were $8.6 billion, up 50% year over year.

Asia

Operating earnings of $341 million increased 21% year over year, driven by volume growth and higher investment margins. Adjusted premiums, fees & other revenues were $2.1 billion, down 2% on a constant-currency basis.

Latin America

Operating earnings were $161 million, up 18% year over year, driven by capital markets and volume growth. Adjusted premiums, fees & other revenues were $888 million, down 7% due to lower annuity sales in Chile.

Europe, the Middle East, and Africa (EMEA)

Operating earnings from EMEA increased 20% year over year to $66 million, primarily driven by favorable taxes and volume growth, partially offset by unfavorable underwriting.
Adjusted premiums, fees & other revenues were $670 million, up 5% year over year on a constant-currency basis.

MetLife Holdings

Adjusted operating earnings from MetLife Holdings came in at $269 million, up 21% year over year.

Operating premiums, fees & other revenues were $1.3 billion, down 5% year over year.

Financial Update

As of Dec 31, 2019, shareholders’ equity was $62.8 billion, up 27.1% year over year.
Long-term debt as of Dec 31, 2019 was $13.5 billion, up 5.5% year over year.

How Have Estimates Been Moving Since Then?

It turns out, estimates revision have trended downward during the past month.

VGM Scores

At this time, MetLife has a nice Growth Score of B, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, MetLife has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.