Manulife Financial: The Canadian dividend from the financial world
The company was founded in 1887 in Canada and is headquartered in Toronto. Manulife offers a wide range of financial products and services, including insurance, investment solutions, asset management and retirement plans. It pays a solid dividend and its results continue to support the stock price. But will it get back to the peak from which it fell 17 years ago?
The firm not only operates in Canada, but also has a strong presence in Asia and the United States, where it operates under the John Hancock brand. Manulife is known for its financial stability and its extensive network of professionals who serve millions of clients around the world. The company focuses on innovation and technology to improve the client experience and increase efficiency.
$MFC+2.0% also emphasizes sustainability and social responsibility, which is evident in their investment strategies focused on environmental, social and governance factors.
Interesting factA: One interesting fact about Manulife Financial Corporation is its historical association with former Canadian Prime Minister Sir John A. Macdonald. Mr. John A. Macdonald, the first Prime Minister of Canada, was one of the key people involved in the establishment of the company in 1887. He served as its first President and Chairman of the Board. This association with such an important figure in Canadian history gives the Company a unique historical significance and heritage.
Management
Roy Gori - CEO
Roy was appointed to his position in 2017. Mr. Gori joined Manulife as President and Chief Executive Officer, Asia in 2015. In this role, he was responsible for operations in 12 markets across Asia and managed Manulife's rapidly growing business in the region.
Roy began his career at Citibank in 1989, where he progressively held senior positions, and was ultimately responsible for the company's retail business in Asia Pacific, which included its insurance and wealth management businesses.
He holds a Bachelor of Economics and Finance from the University of New South Wales and an MBA from the University of Technology, Sydney. He is a member and board member of the Canadian Business Council, a member of the US Business Council, a member of the Geneva Association and a member of the Shanghai Mayor's International Business Leaders Advisory Council. A native Australian, Roy has worked and lived in Sydney, Singapore, Thailand and Hong Kong and is now based in Toronto.
If you're interested in learning more about the CEO himself, you can check out his personal Linkedinwhere he is still active and shares company stories and information.
Industry/Specialty
Life Insurance: The company offers various types of life insurance, including term, permanent and universal life insurance. These products help clients provide financial protection for their families in the event of unforeseen events.
3. Investment Services: $MFC+2.0% offers a wide range of investment products that include mutual funds, asset management, and investment accounts. These products are designed to help clients achieve their financial goals through strategic investments. The firm provides expert investment advice and personalized financial plans that take into account a client's individual needs and risk profile.
Retirement Plans: The Company provides retirement solutions, including individual retirement accounts, plans and other retirement products that help clients prepare for retirement.
Group Insurance: Manulife offers group insurance for employers, which includes life and health insurance, as well as other employee benefits such as long-term care insurance, loss of income insurance and more. Group insurance is designed to help employers attract and retain talented workers by providing a comprehensive package of employee benefits.
Mortgage and Loan Services: The Company provides mortgage loans and other loan products to help clients finance home purchases and significant investments. Products offered include various types of mortgages, including fixed and adjustable rate mortgages, mortgage refinancing and home equity loans. The company also provides personal loans and education loans.
The company's profitability and cash
The company, which was slow to recover its previous highs after a covid stock plunge, was able to rebound last year. To date, its price per share has strengthened since then and is now at its highest in 16 years.
The company's current market capitalization is $46.87 billion. That's the value the company was last at in 2008. But it's still a long way from the top. If the company were to reach that milestone, it would be valued by the market at more than $82 billion. The company now has 38,000 employees.
Because the company has been on the market for decades and its founders are long dead, only 1.66 million of its shares are now privately held. The remaining 99.91% of all shares ever issued are on the market among investors. The company's debt is $9.91 billion.
In 2019, the company's revenue was a nice $59.57 billion. Operating margins were at 7.25%. This brought net income to $4.32 billion for the year. In 2020, revenue increased to $60.99 billion. The margins increased to 7.56%, bringing the company's profit to $4.61 billion. But the last 3 years have been marked by much lower revenues. In 2021, their value came to $46.77 billion. The next year, the decline continued to $22.54 billion and last year the revenue was $37.98 billion. This axis was replicated by both margins and overall profits. Profit margins initially increased to 12.01% in 2021 but fell to negative 6.33% in 2022. Last year they were 10.14% in the black.
The company continues to derive the largest share of its annual revenue from its home country, Canada. That country earned it $3.38 billion in revenue in 2023. This value is equivalent to 46.21% of total sales value. The United States came in second place with $2.49 billion in sales. Asia then took third place with 18.69% of sales. The equivalent is $1.37 billion.
The firm's absolutely crucial segment is global asset management, which earned it $4.35 billion last year. That's just under 60% of all revenue last year.
In 2016,$MFC'+2.0%s earnings per share stood at $1.46. This year, they managed to beat analysts' estimates by 6.11%. But in 2017, management hasn't been able to do that, despite EPS getting into an uptrend. Their value only increased until 2019. Before the pandemic, their annual value was $2.29. The decline occurred just in 2020, when earnings per share fell to $2.16. But 2021 took their value to a brand new peak of $2.57. In 2022 and last year, EPS were $2.29 and $2.62, respectively, which is the highest the company has ever reached. According to current estimates from Wall Street analysts, the value of earnings per share should continue to rise. It could reach as high as $3.1 by 2026.
But the company is no longer this stable in terms of revenue. Indeed, it is often the case that it misses estimates by a significant percentage. In 2016, sales were $39.75 billion. The consensus was projecting a figure 27.95% higher. In 2017, the company managed to beat estimates by 6.09%. Since then, it has only managed to do so once, in 2021. in 2020, for example, revenue came in 92.3% lower than expected. In the last two years, management has still failed to get revenue above market expectations. Last year, it fell short by 51%. The good news, however, is that while the company may continue to miss estimates, its revenue should increase. By 2026, it could get to $37.16 billion.
Revenues from individual sectors have also varied significantly between years. The largest, which focuses on global client wealth management, saw revenue go from a flat $4 billion in 2018 to $5.17 billion in 2021. Last year, it was already only $4.35 billion.
Operating costs
Since 2010, when the company needed $5.2 billion per quarter, the money needed to run the firm has been reduced only three times. The first time this occurred was in 2012 due to the fact that the previous year's expenses increased by 50% in the last quarter. The second decrease, occurred in 2015, when management decided to spend significantly less in the third quarter of that year than in the others. For perspective, this was a drop from $7.3 billion to $5.1 billion. A very significant drop in operating expenses then took place in 2023 and continues to this day. The company has reduced its expense burden from the then $9.6 billion to the current $5, billion and $200 million per quarter.
Dividend
The company began paying a dividend in 2000. It was $0.034 per share when first paid. Its value has grown over time. By 2006, when the 2/1 stock split occurred, it had reached $0.158. But the payout growth didn't stop in 2008. At that time, the dividend was reaching new highs while the stock was falling from them. It wasn't until 2009 that the dividend gradually began to decline. So it wasn't a dramatic reduction from quarter to quarter. Investors had plenty of time to eventually dump the stock.
But since then, there have been no further reductions or interruptions in payouts. The dividend has continued to reach all-time highs despite the recent difficult economic years. Currently, stockholders can look forward to a quarterly payout of $0.293.
Valuation/Comparison to peers
$MFC+2.0%'s PE was zero in 2010 due to negative EPS. It wasn't until 2012 that the company returned to profitability. This resulted in a sharp increase in valuation before the market caught up. The P/E went as high as 80.92 for a brief moment at that time. But by the beginning of the next year, it was already at 8.5 points. It stayed around this value thanks to systematic growth in earnings per share and the share price itself until 2017. At the end of that year, EPS declined. So for the next 3 quarters, the P/E increased to 20. As 2019 and 2020 approached and the pandemic began, the company's valuation dropped, due to the sharp movements in the share price, to 5 points. But from 2022 onwards, it has gradually increased as earnings per share have declined. Now the P/E ratio is at 15 points.
Chubb Ltd $CB+0.1%: is one of the largest publicly traded insurance companies in the world. The company is headquartered in Switzerland. Its history dates back to 1882 when it was founded as a small insurance company in the United States. Today, it operates in more than 54 countries and employs thousands of people worldwide. Chubb is known for its wide range of insurance products, which include not only traditional property and casualty insurance, but also specialized products such as cyber risk insurance, liability insurance, art insurance, aviation and marine insurance.
Sun Life Financial $SLF+1.1%: Sun Life offers a wide range of financial and insurance products that include life insurance, health insurance, accident and disability insurance. The company also provides retirement plans, investment products such as mutual funds, and manages assets for individuals and institutions. The firm focuses on helping clients achieve their financial goals and ensure financial stability at various stages of life.
Willis Towers Watson $WTW-1.8%: is a global consulting and brokerage firm that provides a wide range of services focused on risk management, human resources, benefits, and insurance. The company was formed in 2016 through the merger of two major firms, Willis Group Holdings and Towers Watson & Co. and is headquartered in London. Today, it operates in more than 140 countries and employs tens of thousands of people worldwide.
Blue - $MFC+2.0%, Yellow - $WTW-1.8%, Orange - $CB+0.1%, Turquoise - $SLF+1.1%
Comparingthese three titles, it's clear that $CB+0.1% is the top company in terms ofshare price growth from 2020. This company has gained 78.27% over the last 4 years and 6 months. In second place is $WTW-1.8%, which with a gain of 40.9% leads $MFC+2.0% by just under 3% . Then, in last place in today's comparison is $SLF+1.1%. Its shares have risen above the level they fell from in 2020, but rather haven't looked higher in 2021. Since 2020, this stock has climbed 12%.
Future plans
Digitization and Technology: $MFC is focused on the digital transformation of its services and processes. It plans to continue investing in advanced technologies and digital platforms that will improve the customer experience and efficiency of internal operations. Key areas include leveraging artificial intelligence and machine learning to improve product and service personalization, and speeding up the claims submission and processing process.
ExpansionA: The company plans to continue to expand in high-growth markets, particularly in Asia. The Asian region, where Manulife already has a strong presence, represents a significant opportunity for growth due to the growing demand for financial and insurance products. The company is focused on expanding its offerings and increasing its market position in these dynamic and emerging markets.
Improving the customer experience: focusing on improving the customer experience is another key plan for $MFC+2.0% going forward. Manulife plans to simplify and make its services more accessible through innovative digital tools and platforms that allow clients to easily access information and manage their financial products.
Product and Service Innovation: Manulife plans to continue to focus on innovating its products and services. This includes the development of new financial products that meet the changing needs of clients, such as digital health and wellness products or flexible retirement plans tailored to different life situations.
Outlook
After $MFC+2.0%'s price per share in 2020 hit its lowest since the 2008 downturn, the opposite is now happening. The company has been able to get back on its feet quickly, and while it is still struggling with lower revenues, its business is thriving. Investors, of course, have taken notice and swung into action. Over the past few years, they've pulled the stock back up to where it last was in 2008, when it was plunging from its peak in the financial crisis. One share can now be bought for $26.50. But even that value is far from one that can be considered intrinsic. According to our Fair Price Index, the company is still 25.8% below its fair price. Do Wall Street analysts agree with us?
Of the 15 analysts surveyed, 7 would currently buy the stock immediately. Their outlook for the next 12 months calls for growth of up to 16.94%. In that case, one share would sell for $31 on the stock. The other 4 analysts are already a little less optimistic, but still count on growth. According to them ,$MFC+2.0%stock could pull even higher by 7.7% in the next year. 3 analysts would just hold the stock and wait for further developments. The last analyst would then prefer to get rid of them. He fears a possible drop of up to 4.8%. If that were to happen, one share would trade at $25.26. How do you feel about this company?
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