Insurance Stocks

MetLife Inc Valuation – January 2019 $MET

Company Profile (excerpt from Reuters): MetLife, Inc. (MetLife), incorporated on August 10, 1999, is a provider of life insurance, annuities, employee benefits and asset management. The Company’s segments include U.S.; Asia; Latin America; Europe, the Middle East and Africa (EMEA); MetLife Holdings, and Corporate & Other. In the United States, the Company provides a range of insurance and financial services products, including life, dental, disability, property and casualty, guaranteed interest, stable value and annuities to both individuals and groups. Outside the United States, the Company provides life, medical, dental, credit and other accident and health insurance, as well as annuities, endowment and retirement and savings products to both individuals and groups.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of MET – January 2019

Stage 1: Is this company suitable for the Defensive Investor or the Enterprising Investor?

What kind of Intelligent Investor are you?

Defensive Investor; must pass all 6 of the following tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $41,989,964,657 Pass
2. Earnings Stability Positive EPS for 10 years prior Fail
3. Dividend Record Dividend Payments for 10 years prior Pass
4. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 45.90% Pass
5. Moderate PEmg Ratio PEmg < 20 12.39 Pass
6. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 0.82 Pass
Enterprising Investor; must pass all 3 of the following tests, or be suitable for the Defensive Investor.
1. Earnings Stability Positive EPS for 5 years prior Pass
2. Dividend Record Currently Pays Dividend Pass
3. Earnings Growth EPSmg greater than 5 years ago Fail

 

Stage 2: Determination of Intrinsic Value

EPSmg $3.43
MG Growth Estimate -1.32%
MG Value $20.10
Opinion Overvalued
MG Grade C
MG Value based on 3% Growth $49.78
MG Value based on 0% Growth $29.18
Market Implied Growth Rate 1.95%
Current Price $42.55
% of Intrinsic Value 211.68%

Metlife Inc does not satisfy the requirements of either the Enterprising Investor or the more conservative Defensive Investor. The Defensive Investor is concerned with the insufficient earnings stability over the last ten years. The Enterprising Investor has concerns regarding the lack of earnings growth over the last five years. As a result, all value investors following the ModernGraham approach should explore other opportunities at this time or proceed cautiously with a speculative attitude.

As for a valuation, the company appears to be Overvalued after seeing its EPSmg (normalized earnings) decline from $3.77 in 2014 to an estimated $3.43 for 2018. This level of demonstrated earnings growth does not support the market’s implied estimate of 1.95% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on Benjamin Graham’s formula, returns an estimate of intrinsic value below the price.

At the time of valuation, further research into Metlife Inc revealed the company was trading below its Graham Number of $71.76. The company pays a dividend of $1.6 per share, for a yield of 3.8%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 12.39, which was below the industry average of 30.63, which by some methods of valuation makes it one of the most undervalued stocks in its industry.

Metlife Inc receives an average overall rating in the ModernGraham grading system, scoring a C.

Stage 3: Information for Further Research

Graham Number $71.76
PEmg 12.39
PB Ratio 0.82
Dividend Yield 3.76%
TTM Dividend $1.60
Number of Consecutive Years of Dividend Growth 5

Useful Links:

ModernGraham tagged articles Morningstar
Google Finance MSN Money
Yahoo Finance Seeking Alpha
GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Balance Sheet Information 9/1/2018
Long-Term Debt & Capital Lease Obligation $16,554,000,000
Total Assets $698,451,000,000
Intangible Assets $9,440,000,000
Total Liabilities $646,642,000,000
Shares Outstanding (Diluted Average) 1,000,700,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $4.07
Dec2017 $3.62
Dec2016 $0.67
Dec2015 $4.62
Dec2014 $5.42
Dec2013 $2.91
Dec2012 $1.12
Dec2011 $5.76
Dec2010 $2.86
Dec2009 -$2.89
Dec2008 $4.14
Dec2007 $5.48
Dec2006 $7.99
Dec2005 $6.16
Dec2004 $3.65
Dec2003 $2.94
Dec2002 $2.20
Dec2001 $0.62
Dec2000 $1.49

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $3.43
Dec2017 $3.23
Dec2016 $3.00
Dec2015 $4.10
Dec2014 $3.77
Dec2013 $2.61
Dec2012 $2.37
Dec2011 $3.02
Dec2010 $2.27
Dec2009 $2.71
Dec2008 $5.50
Dec2007 $5.87
Dec2006 $5.57
Dec2005 $3.95
Dec2004 $2.62
Dec2003 $1.89
Dec2002 $1.20

Recommended Reading:

Other ModernGraham posts about the company

MetLife Inc Valuation – March 2018 $MET
Best Stocks Below Their Graham Number – February 2017
10 Best Dividend Paying Stocks for the Enterprising Investor – February 2017
10 Stocks for Using A Benjamin Graham Value Investing Strategy – February 2017
Best Stocks Below Their Graham Number – January 2017

Other ModernGraham posts about related companies

Aflac Inc Valuation – January 2019 $AFL
Principal Financial Group Inc Valuation – January 2019 $PFG
Progressive Corp Valuation – January 2019 $PGR
Lincoln National Corp Valuation – January 2019 $LNC
Cincinnati Financial Corp Valuation – January 2019 $CINF
Aon PLC Valuation – November 2018 $AON
Travelers Companies Inc Valuation – November 2018 $TRV
Stewart Information Services Corp Valuation – August 2018 $STC
Kemper Corp Valuation – August 2018 $KMPR
CNO Financial Group Inc Valuation – August 2018 $CNO

Disclaimer:

The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  See my current holdings here.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.  Please be sure to review our detailed disclaimer.

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Back To Top