Manulife (MFC) Shares Rally 19% YTD: More Room for Growth?

Core Viewpoint - Manulife Financial Corporation (MFC) has shown strong performance in the market, with an 18.5% increase in shares year to date, outperforming industry and sector averages [1] Financial Performance - MFC has a market capitalization of $47.2 billion and an average trading volume of 3.1 million shares over the last three months [1] - The company has delivered an earnings surprise in each of the last six quarters [2] - Manulife's return on equity (ROE) stands at 16.3%, exceeding the industry average of 15.5% [2] - The long-term earnings growth rate is pegged at 10%, with core EPS growth targeted between 10% and 12% over the medium term [3] Growth Drivers - The Zacks Consensus Estimate for MFC's earnings per share (EPS) is projected at $2.74 for 2024 and $2.96 for 2025, indicating year-over-year increases of 6.6% and 8% respectively [3] - The Asia business is a significant growth driver, with a target for it to account for half of the company's core earnings by 2025 [4] - MFC is expanding its Wealth and Asset Management business, focusing on Europe and the EMEA market as key growth areas [5] Strategic Initiatives - The company is investing in high-growth, less capital-intensive businesses, aiming for two-thirds of core earnings from these sectors [5] - MFC is enhancing its digital platform and adopting new technologies, including generative AI, in line with industry trends [6] Capital Position and Dividends - Consistent cash flow has led to a strong capital position, allowing MFC to increase dividends at a seven-year CAGR of 10% [8] - The company targets a dividend payout ratio of 35-45% over the medium term and aims for a leverage ratio of 25% [8] - Free cash flow conversion has remained above 100% in recent quarters, reflecting solid earnings [8]