Future Prospects of MetLife's Advantages in 2025
New York Life Insurance, the biggest life insurance company in the USA, has witnessed its stock surge by 28% within the past year, surpassing the 23% increase seen in the S&P500 index during the same timeframe. Intriguingly, its rival, Prudential Financial (NYSE: PRU), has also seen a 19% growth over the same period. What are the key factors influencing NEW LIFE's stock performance and what can we anticipate in the near future?
The corporation published Q3 earnings that didn't meet forecasts. Adjusted revenue from operations decreased by 3.4% year-on-year to $17.6 billion, with Premiums, fees, and other income falling by approximately 5% compared to the previous year. However, investment-related income grew by 8%. The earnings slump was largely due to increased expenses, which went up 7.3% year-on-year due to higher interest credited to the policyholder account balances. The company's group benefits segment, which offers health, dental, life, and other insurance products to organizations for their employees, underperformed in the last quarter. The weakness is due to problematic non-medical health underwriting and the annual actuarial assumption review.
Despite MET's variable performance in recent times, the Trefis Quality Portfolio, a group of 30 stocks, has yielded better returns with less risk compared to the S&P 500 index over the past four years. The "Quality Portfolio" metrics indicate a smoother trajectory, as evidenced by its performance charts. So is MetLife stock a worthwhile investment at its current price points?
There are several factors that could boost MetLife stock in the short term. Firstly, the U.S. Federal Reserve might opt for a more gradual approach towards monetary easing. This would advantage MetLife, as opposed to automotive or general insurers which depend on shorter-term policies and underwriting revenue, life insurers are more dependent on interest rates due to their lengthy bond-oriented investment strategies. Secondly, Donald Trump's presidency could benefit insurers like MetLife, owing to potential less stringent regulations and tax reductions that could enhance profitability. Moreover, the company has been expanding its dividend yield and its robust share repurchase program could fuel growth in the long term. At its present price of $82 per share, NEW LIFE trades about 5% under Trefis' estimated valuation for NEW LIFE’s worth of approximately $86 per share.
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Despite MetLife's challenging Q3 earnings, the Trefis "Quality Portfolio" containing MetLife stock has performed better with lower risk compared to the S&P 500 index over the past four years. In the near future, a more gradual approach from the U.S. Federal Reserve towards monetary easing could benefit MetLife, as life insurers like MetLife are more dependent on interest rates due to their long-term investment strategies.
