Manulife (MFC) Stock Rises 19% YTD: Will the Rally Last?

Core Insights - Manulife Financial Corporation (MFC) has seen a 19% increase in its stock price year to date, outperforming the industry, finance sector, and S&P 500 [1] - The company is a leading life insurer in Canada with growing operations in the U.S. and Asia, and has a history of positive earnings surprises [2] - Manulife's return on equity (ROE) stands at 16.2%, above the industry average of 15.5%, with a target ROE of 18% by 2027 [2] Business Performance - The Asia business is a significant earnings contributor, expected to account for 50% of overall earnings by 2027, driven by strong volume growth and favorable demographics [3] - Manulife is focusing on high ROE and growth segments in North America and sees Europe as a key growth area, with long-term investments planned [4] Earnings and Growth Strategy - The highest potential businesses, including operations in Asia and Global Wealth and Asset Management, currently contribute two-thirds of core earnings, with a goal to increase this to 75% [5] - The company is implementing digitalization and automation strategies to improve efficiency, targeting an expense efficiency ratio of less than 45% [5] Financial Health - Manulife is enhancing its balance sheet by improving liquidity and targeting a leverage ratio of 25%, with free cash flow conversion exceeding 100% in recent quarters [6] - The company has increased dividends at a six-year CAGR of 10% and aims for a dividend payout ratio of 35-45% in the medium term [6] Earnings Estimates - The Zacks Consensus Estimate for MFC's earnings per share (EPS) is $2.72 for 2024 and $2.86 for 2025, indicating year-over-year growth of 5.8% and 5.2% respectively [7] - The long-term earnings growth rate is projected at 10%, with expected core EPS growth of 10-12% in the medium term [7]