Market Capitalization $49.3 Billion

Transcription

1 BUY HOLD SELL A+ A A- B+ B B- C+ C C- D+ D D- E+ E E- F Annual Dividend Rate BUY BUY RATING SINCE 02/08/2013 TARGET PRICE $51.18 MET BUSINESS DESCRIPTION MetLife, Inc. provides life insurance, annuities, employee benefits, and asset management products in the United States, Japan, Latin America, Asia, Europe, and the Middle East. STOCK PERFORMANCE (%) 3 Mo. 1 Yr. 3 Yr (Ann) Price Change GROWTH (%) Last Qtr 12 Mo. 3 Yr CAGR Revenues Net Income EPS RETURN ON EQUITY (%) MET Ind Avg S&P 500 Q Q Q P/E COMPARISON Sector: Financial Services Sub-Industry: Life & Health Insurance Source: S&P Weekly Price: (US$) SMA (50) SMA (100) 1 Year 2 Years Rating History BUY Volume in Millions COMPUSTAT for Price and Volume, TheStreet Ratings, Inc. for Rating History TARGET PRICE $ MET EPS ANALYSIS¹ ($) Ind Avg S&P 500 RECOMMENDATION We rate (MET) a BUY. This is driven by some important positives, which we believe should have a greater impact than any nesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its increase in net income, attractive valuation levels, growth in earnings per share and largely solid financial position with reasonable debt levels by most measures. We feel its strengths outweigh the fact that the company has had somewhat disappointing return on equity. HIGHLIGHTS The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and greatly outperformed compared to the Insurance industry average. The net income increased by 2.0% when compared to the same quarter one year prior, going from $2, million to $2, million. has improved earnings per share by 5.9% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, reported lower earnings of $4.55 versus $5.42 in the prior year. This year, the market expects an improvement in earnings ($5.45 versus $4.55). Q Q Q Q Q Q Q NA = not available NM = not meaningful Q Q Compustat fiscal year convention is used for all fundamental data items. Despite the revenue results, MET has outperformed against the industry average of 15.3%. Since the same quarter one year prior, revenues slightly dropped by 1.1%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share. Despite currently having a low debt-to-equity ratio of 0.33, it is higher than that of the industry average, inferring that management of debt levels may need to be evaluated further. PAGE 1

2 PEER GROUP ANALYSIS REVENUE GROWTH AND EBITDA MARGIN* Revenue Growth (TTM) -40% 20% UNM UNFAVORABLE 13.5% CNO EBITDA Margin (TTM) FAVORABLE PRU PFG 16% Companies with higher EBITDA margins and revenue growth rates are outperforming companies with lower EBITDA margins and revenue growth rates. Companies for this scatter plot have a market capitalization between $3.5 Billion and. Companies with NA or NM values do not appear. *EBITDA Earnings Before Interest, Taxes, Depreciation and Amortization. REVENUE GROWTH AND EARNINGS YIELD Revenue Growth (TTM) -40% 20% UNFAVORABLE AEG 4% TMK Earnings Yield (TTM) PFG LNC CNO AFL MFC UNM FAVORABLE MET SLF PRU 14% Companies that exhibit both a high earnings yield and high revenue growth are generally more attractive than companies with low revenue growth and low earnings yield. Companies for this scatter plot have revenue growth rates between -31.6% and 15.8%. Companies with NA or NM values do not appear. INDUSTRY ANALYSIS The US insurance industry provides a broad range of financial security products for individuals and businesses. The industry includes primary insurers, reinsurers and agency and brokerage firms. Insurance companies can be categorized into life and health, property and casualty and reinsurance. Premiums and investment income are the primary component of overall revenue. The industry is mature and dominated by large companies with intense price competition. The US insurance industry has witnessed a great deal of merger and acquisition activity in recent years. The life insurance industry remains highly competitive due to rapid product development and shortened product life-cycles. In recent years, the L&H segment has been characterized by a dramatic product shift from traditional life insurance to annuity and retirement asset management. Life insurance in the US expanded to more than $578 billion, or nearly half of total business line. This can be attributed to an increased focus on retirement and estate planning, which has led to robust sales of combined savings protection products and annuities. The trend toward the single premium business and pension and annuities products drove sales. Sweeping national health insurance reform was signed into law in 2010 that allows young people to stay on their parent s health plan, begins to close the Medicare drug plan donut hole, and phases in mandatory coverage of all Americans. Significant challenges have arisen for property and casualty insurance companies. However, the absence of any recent major casualty or natural calamity has benefited the industry. The US reinsurance market has entered a soft phase of the cycle and will remain as such assuming no major catastrophes in the coming quarters. The primary and reinsurance sectors experienced divergent pricing trends, but the reinsurance market remains relatively stable. The insurance industry is not immune to the financial troubles that plague the rest of the US economy. Despite having minor exposure to higher risk mortgage-related assets, the slowdown in the US economy may adversely impact insurers performance in the near future. Insurers face challenges related to catastrophe losses, increasing price pressure and changes in the legal and regulatory environment, all of which could erode future underwriting performance and profitability. On a positive note, US insurers may embrace international market opportunities in response to increased market saturation at the domestic level. PEER GROUP: Insurance Recent Market Price/ Net Sales Net Income Ticker Company Name Price ($) Cap ($M) Earnings TTM ($M) TTM ($M) MET , , , UNM UNUM GROUP , , TMK TORCHMARK CORP , , CNO CNO FINANCIAL GROUP INC , , PRU PRUDENTIAL FINANCIAL INC , , , AFL AFLAC INC , , , MFC MANULIFE FINANCIAL CORP , , , SLF SUN LIFE FINANCIAL INC , , , AEG AEGON NV , , PFG PRINCIPAL FINANCIAL GRP INC , , , LNC LINCOLN NATIONAL CORP , , , The peer group comparison is based on Major Life & Health Insurance companies of comparable size. PAGE 2

3 Annual Dividend Rate COMPANY DESCRIPTION MetLife, Inc. provides life insurance, annuities, employee benefits, and asset management products in the United States, Japan, Latin America, Asia, Europe, and the Middle East. It operates in six segments: Retail; Group, Voluntary & Worksite Benefits; Corporate Benefit Funding; Latin America; Asia; and Europe, the Middle East and Africa. The company provides variable, universal, term, and whole life products; individual disability income products; personal lines property and casualty insurance, including private passenger automobile, homeowners, and personal excess liability insurance; and variable and fixed annuities for asset accumulation and distribution needs, as well as mutual funds and other securities products. It also offers group insurance products, such as variable, universal, and term life products; dental, group short- and long-term disability, and accidental death and dismemberment coverages; and voluntary and worksite products consisting of personal lines property and casualty insurance, as well as LTC, prepaid legal plans, and critical illness products. In addition, the company provides annuity and investment products comprising guaranteed interest products and other stable value products, income annuities, and separate account contracts for the investment management of defined benefit and defined contribution plan assets; and structured settlements and products to fund postretirement benefits and company-, bank- or trust-owned life insurance, as well as health insurance, group medical, credit insurance, endowment, retirement, and savings products. It serves individuals and corporations, as well as other institutions and their employees. The company sells its products through sales forces, third-party organizations, independent agents, and property and casualty specialists, as well as through career agency, bancassurance, direct marketing, brokerage, and e-commerce channels. MetLife, Inc. was founded in 1863 and is based in New York, New York. 200 Park Avenue New York, NY USA Phone: STOCK-AT-A-GLANCE Below is a summary of the major fundamental and technical factors we consider when determining our overall recommendation of MET shares. It is provided in order to give you a deeper understanding of our rating methodology as well as to paint a more complete picture of a stock's strengths and nesses. It is important to note, however, that these factors only tell part of the story. To gain an even more comprehensive understanding of our stance on the stock, these factors must be assessed in combination with the stock s valuation. Please refer to our Valuation section on page 5 for further information. FACTOR SCORE Growth 3.0 out of 5 stars Measures the growth of both the company's income statement and cash flow. On this factor, MET has a growth score better than 50% of the stocks we rate. Total Return 3.0 out of 5 stars Measures the historical price movement of the stock. The stock performance of this company has beaten 50% of the companies we cover. Efficiency 3.5 out of 5 stars Measures the strength and historic growth of a company's return on invested capital. The company has generated more income per dollar of capital than 60% of the companies we review. Price volatility 2.5 out of 5 stars Measures the volatility of the company's stock price historically. The stock is less volatile than 40% of the stocks we monitor. Solvency 5.0 out of 5 stars Measures the solvency of the company based on several ratios. The company is more solvent than 90% of the companies we analyze. Income 4.5 out of 5 stars Measures dividend yield and payouts to shareholders. The company's dividend is higher than 80% of the companies we track. THESTREET RATINGS RESEARCH METHODOLOGY TheStreet Ratings' stock model projects a stock's total return potential over a 12-month period including both price appreciation and dividends. Our Buy, Hold or Sell ratings designate how we expect these stocks to perform against a general benchmark of the equities market and interest rates. While our model is quantitative, it utilizes both subjective and objective elements. For instance, subjective elements include expected equities market returns, future interest rates, implied industry outlook and forecasted company earnings. Objective elements include volatility of past operating revenues, financial strength, and company cash flows. Our model gauges the relationship between risk and reward in several ways, including: the pricing drawdown as compared to potential profit volatility, i.e.how much one is willing to risk in order to earn profits; the level of acceptable volatility for highly performing stocks; the current valuation as compared to projected earnings growth; and the financial strength of the underlying company as compared to its stock's valuation as compared to projected earnings growth; and the financial strength of the underlying company as compared to its stock's performance. These and many more derived observations are then combined, ranked, weighted, and scenario-tested to create a more complete analysis. The result is a systematic and disciplined method of selecting stocks. PAGE 3

4 Consensus EPS Estimates² ($) IBES consensus estimates are provided by Thomson Financial FINANCIAL ANALYSIS 's gross profit margin for the first quarter of its fiscal year 2016 is essentially unchanged when compared to the same period a year ago. Even though sales decreased, the net income has increased, representing an increase to the bottom line. At the same time, stockholders' equity ("net worth") has remained virtually unchanged only increasing by 2.71% from the same quarter last year Q2 FY E 2016(E) 6.00 E 2017(E) STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12-months. To learn more visit INCOME STATEMENT Net Sales ($mil) 18, , EBITDA ($mil) NA NA EBIT ($mil) 3, , Net Income ($mil) 2, , BALANCE SHEET Cash & Equiv. ($mil) 38, , Total Assets ($mil) 917, , Total Debt ($mil) 25, , Equity ($mil) 75, , PROFITABILITY Gross Profit Margin 17.43% 17.23% EBITDA Margin NA NA Operating Margin 17.43% 17.23% Sales Turnover Return on Assets 0.58% 0.77% Return on Equity 6.94% 9.51% DEBT Current Ratio NA NA Debt/Capital Interest Expense Interest Coverage SHARE DATA Shares outstanding (mil) 1,099 1,114 Div / share EPS Book value / share Institutional Own % NA NA Avg Daily Volume 6,218,504 8,104,744 2 Sum of quarterly figures may not match annual estimates due to use of median consensus estimates. PAGE 4

5 RATINGS HISTORY Our rating for has not changed since 2/8/2013. As of 5/19/2016, the stock was trading at a price of which is 23.9% below its 52-week high of $58.23 and 26.6% above its 52-week low of $ Year Chart BUY: $ $60 $50 $40 MOST RECENT RATINGS CHANGES Date Price Action From To 5/19/14 $49.92 No Change Buy Buy Price reflects the closing price as of the date listed, if available RATINGS DEFINITIONS & DISTRIBUTION OF THESTREET RATINGS (as of 5/19/2016) 38.89% Buy - We believe that this stock has the opportunity to appreciate and produce a total return of more than 10% over the next 12 months % Hold - We do not believe this stock offers conclusive evidence to warrant the purchase or sale of shares at this time and that its likelihood of positive total return is roughly in balance with the risk of loss % Sell - We believe that this stock is likely to decline by more than 10% over the next 12 months, with the risk involved too great to compensate for any possible returns. TheStreet Ratings 14 Wall Street, 15th Floor New York, NY Research Contact: Sales Contact: VALUATION BUY. This stock's P/E ratio indicates a discount compared to an average of for the Insurance industry and a significant discount compared to the S&P 500 average of Conducting a second comparison, its price-to-book ratio of 0.64 indicates a significant discount versus the S&P 500 average of 2.69 and a discount versus the industry average of The price-to-sales ratio is well below both the S&P 500 average and the industry average, indicating a discount. Upon assessment of these and other key valuation criteria, METLIFE INC proves to trade at a discount to investment alternatives within the industry. Price/Earnings MET 9.51 Peers Discount. A lower P/E ratio than its peers can signify a less expensive stock or lower growth expectations. Price/Projected Earnings MET 7.39 Peers Discount. A lower price-to-projected earnings ratio than its peers can signify a less expensive stock or lower future growth expectations. Price/Book MET 0.64 Peers 1.53 Discount. A lower price-to-book ratio makes a stock more attractive to investors seeking stocks with lower market values per dollar of equity on the balance sheet. Price/Sales MET 0.70 Peers 1.42 Discount. In the absence of P/E and P/B multiples, the price-to-sales ratio can display the value investors are placing on each dollar of sales. MET is trading at a significant discount to its industry on this measurement. DISCLAIMER: Price/CashFlow MET 3.62 Peers Discount. The P/CF ratio, a stock s price divided by the company's cash flow from operations, is useful for comparing companies with different capital requirements or financing structures. Price to Earnings/Growth MET 0.49 Peers 1.17 Discount. The PEG ratio is the stock s P/E divided by the consensus estimate of long-term earnings growth. Faster growth can justify higher price multiples. MET trades at a significant discount to its peers. Earnings Growth lower higher MET Peers Lower. Elevated earnings growth rates can lead to capital appreciation and justify higher price-to-earnings ratios. However, MET is expected to significantly trail its peers on the basis of its earnings growth rate. Sales Growth lower higher MET Peers Lower. A sales growth rate that trails the industry implies that a company is losing market share. MET significantly trails its peers on the basis of sales growth The opinions and information contained herein have been obtained or derived from sources believed to be reliable, but TheStreet Ratings cannot guarantee its accuracy and completeness, and that of the opinions based thereon. Data is provided via the COMPUSTAT Xpressfeed product from Standard &Poor's, a division of The McGraw-Hill Companies, Inc., as well as other third-party data providers. TheStreet Ratings is a division of TheStreet, Inc., which is a publisher. This research report contains opinions and is provided for informational purposes only. You should not rely solely upon the research herein for purposes of transacting securities or other investments, and you are encouraged to conduct your own research and due diligence, and to seek the advice of a qualified securities professional, before you make any investment. None of the information contained in this report constitutes, or is intended to constitute a recommendation by TheStreet Ratings of any particular security or trading strategy or a determination by TheStreet Ratings that any security or trading strategy is suitable for any specific person. To the extent any of the information contained herein may be deemed to be investment advice, such information is impersonal and not tailored to the investment needs of any specific person. Your use of this report is governed by TheStreet, Inc.'s Terms of Use found at PAGE 5