Opinions
Andy Nasr
Manulife Financial
MFC-T
HOLD
Feb 09, 2016
Stock price when the opinion was issued
You might be interested:
Insurance companies have been better insulated from tariffs. Interest rates going up would help them. Really nice beat on Q4, really clean earnings (uncharacteristic after the last 20 years). Growing 12%, trading at 8.2x. Yield is 4%, growing ~8% a year. Asset sales.
Could still be a Top Pick in an environment like this.
The insurance business, in general, is not expanding dramatically. You get the nice dividend, which means they're not investing in the business. And they don't invest in the business because there's really nowhere to put their money for a high ROIC. Highly regulated, higher interest rates have a negative impact.
For him, the dividend is not a reason to buy things. Doing a good job, but there are better places to invest in financial services.
Doesn't believe Asian exposure is affected by US-China issues. Would only be affected secondarily if economy started to slow and people had less money in general.
Nice recent beat. Still has momentum in Asia. Wealth management earnings were up 8%, even after the $43M charge on California wildfires. At 9.7x PE for 2026, still cheaper than Canadian banks and than SLF and GWO. Reasonable 10% growth rate. Lowest payout ratio among peers. Another "when", not "if", story. Yield is 4.02%, with nice growth.
Whether looking at this, a US insurance company, US bank or Canadian bank, the financial sector has declined almost in lockstep with the decline of US 10 year bonds. That tells you that people are going to these things when they are more optimistic about rising rates. This company funds their liabilities through their assets, and their liabilities tend to go down when rates go up. Have hedged a lot of the interest rate exposure. The other concern is their Asian exposure. He would almost rather own a Canadian bank because their businesses are little more diverse insulating you from just one product line. Dividend yield of 3.9%.