The last time I wrote about MetLife, Inc. (NYSE:MET) I stated, "I like the longer term price appreciation story in MetLife that much better." Since the last article it dropped 4.41% versus the 1.55% gain the S&P 500 (NYSEARCA:SPY) posted. MetLife provides insurance, annuities, and employee benefit programs in 50 countries through its subsidiaries and affiliates.
On February 12, 2014, the company reported fourth quarter earnings of $1.37 per share, which beat the consensus of analysts' estimates by $0.07. In the past year the company's stock is up 35.18% excluding dividends (up 37.54% including dividends), and is beating the S&P 500, which has gained 19.85% in the same time frame. With all this in mind, I'd like to take a moment to evaluate the stock on a fundamental, financial and technical basis to see if it's worth buying more shares of the company right now for the financial sector of my dividend portfolio.
The company currently trades at a trailing 12-month P/E ratio of 22.8, which is fairly priced, but I mainly like to purchase a stock based on where the company is going in the future as opposed to what it has done in the past. On that note, the 1-year forward-looking P/E ratio of 8.77 is currently inexpensively priced for the future in terms of the right here, right now. Next year's estimated earnings are $5.70 per share and I'd consider the stock inexpensive until about $86. The 1-year PEG ratio (9.46), which measures the ratio of the price you're currently paying for the trailing 12-month earnings on the stock while dividing it by the earnings growth of the company for a specified amount of time (I like looking at a 1-year horizon), tells me that the company is expensively priced based on a 1-year EPS growth rate of 2.41%. Below is a comparison table of the fundamentals metrics for the company for when I wrote all articles pertaining to the company.
EPS Next YR ($)
My Target Price ($)
EPS next YR (%)
On a financial basis, the things I look for are the dividend payouts, return on assets, equity and investment. The company pays a dividend of 2.2% with a payout ratio of 50% of trailing 12-month earnings while sporting return on assets, equity and investment values of 0.3%, 3.9% and 1.1%, respectively, which are all respectable values. Because I believe the market may get a bit choppy here and would like a safety play, I don't believe the 2.2% yield of this company is good enough for me to take shelter in for the time being. Below is a comparison table of the financial metrics for the company for when I wrote all articles pertaining to the company.
Payout TTM (%)
Looking first at the relative strength index chart [RSI] at the top, I see the stock bouncing off of oversold territory back at the beginning of February with a current value of 48.69. I will look at the moving average convergence-divergence [MACD] chart next. I see that the black line is just crossed the red line with the divergence bars increasing in height, indicating bullish momentum. As for the stock price itself ($49.88), I'm looking at $50.40 to act as resistance and the 200-day simple moving average (currently $47.75) to act as support for a risk/reward ratio which plays out to be -4.27% to 1.04%.
- The company reported earnings and revenue that beat expectations. On 12Feb14 the company reported fourth quarter earnings of $1.37 which beat estimates by $0.07 on revenue of $18.38 billion which also beat estimates by $950 million.
- The company extended its distribution partnership with Citi (C). This distribution deal allows MetLife to provide credit insurance products to Citigroup clients till 2025.
- Citi gives the company a "buy" rating. The price target was also lifted from $55 to $62 on expectations that sales growth and free cash flow will increase.
The company reported pretty good earnings after the bell today which should give the stock a lift going into tomorrow. Fundamentally the company is inexpensively priced based on future earnings and expensively on future growth potential. Financially the dividend is secure but is a low yielder. On a technical basis I believe there is some bullish momentum. Due to the bullish technicals, secure dividend, and earnings beat I'm going to be pulling the trigger on a very small batch of this particular name right now. Because I swapped out Cincinnati Financial (NASDAQ:CINF) for MetLife in my dividend portfolio it is only fair that I provide an update from the swap-out date. From November 19, 2013, MetLife is down 4.41% while Cincinnati Financial is down 8.61%. The trade swap-out has worked out pretty well so far, granted it is a loss.
Disclaimer: This article is meant to serve as a journal for myself as to the rationale of why I bought/sold this stock when I look back on it in the future. These are only my personal opinions and you should do your own homework. Only you are responsible for what you trade and happy investing!
Disclosure: I am long MET, C, SPY. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.