Manulife Financial Stock Near 52-Week High: What Should Investors Do?

Manulife Financial Corporation MFC closed at $31.88 on Thursday, near its 52-week high of $33.07. This proximity underscores investor confidence. It has the ingredients for further price appreciation. The stock is trading above the 50-day and 200-day simple moving averages (SMA) of $31.44 and $30.60, respectively, indicating solid upward momentum. SMA is a widely used technical analysis tool to predict future price trends by analyzing historical price data.Shares of MFC have rallied 18.1% in the past year, outperforming the industry and the S&P 500 composite’s growth of 16.1% and 12.3%, respectively. It, however, underperformed the Finance sector’s return of 21.9%. Image Source: Zacks Investment ResearchThe life insurer has a solid track record of beating earnings estimates in three of the past four quarters and missed in one, with an average surprise of 4.11%.Image Source: Zacks Investment ResearchPremium ValuationManulife Financial shares are trading at a premium to the industry. The company’s price-to-earnings ratio of 10.44X is higher than the industry average of 8.12X. The stock is also expensive compared with other players like Reinsurance Group of America, Incorporated RGA, Brighthouse Financial, Inc. BHF and Voya Financial, Inc. VOYA.Average Target Price for MFC Suggests UpsideBased on short-term price targets offered by 12 analysts, the Zacks average price target is $34.84 per share. The average suggests a potential 9.2% upside from the last closing price.Image Source: Zacks Investment ResearchMFC’s Growth Projection EncouragesThe Zacks Consensus Estimate for Manulife Financial’s 2025 earnings per share indicates a year-over-year increase of 4.2%. The consensus estimate for 2026 earnings per share and revenues indicates an increase of 7.7% and 8.1%, respectively, from the corresponding 2024 estimates.Optimist Analyst Sentiment on MFCThree of the six analysts covering the stock have raised estimates for 2025, and five of the six analysts have raised the same for 2026 over the past 60 days. Thus, the Zacks Consensus Estimate for 2025 and 2026 earnings has moved up 2.8% and 2.2%, respectively, in the past 60 days.Manulife Financial’s Higher Return on CapitalReturn on equity in the trailing 12 months was 15.8%, better than the industry average of 15.3%. This highlights the company’s efficiency in utilizing shareholders’ funds.Image Source: Zacks Investment ResearchKey Points to Note for MFCAs its Asia business is reaping solid operational results, Manulife Financial targets to account for half of its core earnings by 2025 and play a crucial role in its long-term growth. Thus, the insurer is continually scaling up its business across Asia. We believe MFC is well-positioned to benefit from continued business growth momentum, higher expected earnings on insurance contracts and higher expected investment earnings, with notable growth from the largest in-force business, Hong Kong and expanding distribution network.Manulife Financial is expanding its Wealth and Asset Management business and has identified Europe (and the wider EMEA market) as a significant growth area. It is making long-term investments in this region. MFC has been accelerating growth in the highest-potential businesses. Its inorganic growth is impressive, as this life insurer prudently deploys capital in high-growth, less capital-intensive and higher-return businesses.Banking on its sturdy capital position, MFC distributes wealth to shareholders through higher dividends and share buybacks. The company has increased its dividend at a seven-year CAGR of 10% and targets a 35-45% dividend payout over the medium term. MFC is strengthening its balance sheet and thus targets a leverage ratio of 25%. Notably, its free cash flow conversion has remained more than 100% over the last few quarters, reflecting its solid earnings.What to Do With MFC Stock?Manulife Financial is set to grow on solid Asia business, growing Wealth and Asset Management business, strong free cash flow conversion ratio and a solid capital position. A medium-term expense efficiency ratio target of less than 45%, banking on diligent expense management, should drive growth. Positive analyst sentiment as well as favorable growth estimates should continue to benefit the insurer over the long term. Consistent wealth distribution makes it an attractive pick for yield-seeking investors and favorable ROE also poises MFC for growth. MFC also has a VGM Score of B. Stocks with a favorable VGM Score are those with the most attractive value, best growth and most promising momentum compared with peers. Given the premium valuation, investors should wait for a better entry point for this Zacks Rank #3 (Hold) stock. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.Only $1 to See All Zacks' Buys and SellsWe're not kidding.Several years ago, we shocked our members by offering them 30-day access to all our picks for the total sum of only $1. No obligation to spend another cent. Thousands have taken advantage of this opportunity.Thousands did not - they thought there must be a catch. Yes, we do have a reason. We want you to get acquainted with our portfolio services like Surprise Trader, Stocks Under $10, Technology Innovators, and more, that closed 256 positions with double- and triple-digit gains in 2024 alone.See Stocks Now >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Manulife Financial Corp (MFC): Free Stock Analysis Report Reinsurance Group of America, Incorporated (RGA): Free Stock Analysis Report Voya Financial, Inc. (VOYA): Free Stock Analysis Report Brighthouse Financial, Inc. (BHF): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks