MetLife Doesn't Seem To Have A Pulse Right Now

| About: MetLife, Inc. (MET)
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Summary

The stock has been relatively flat during the past year.

Although the stock seems inexpensive on 2015 earnings estimates, those estimates have been slashed since the last time I wrote about the stock.

A new Chief Marketing Officer has been hired and will start in the middle of January.

The last time I analyzed MetLife (NYSE:MET) on November 16, 2014, I stated:

"The name is still extremely undervalued, but there just isn't enough earnings growth potential that compels me to double up on it for the IRA."

Since the article was published, the stock has increased 1.17% versus the 2.24% gain the S&P 500 (NYSEARCA:SPY) posted. The stock dropped as low as 7.12% and I haven't bought any shares in the meantime. MetLife is a global provider of insurance, annuities and employee benefit programs in the United States, Japan, Latin America, Asia, Europe & Middle East. It offers life insurance, annuities, property and casualty insurance, and other financial services.

On October 29, 2014, the company reported third quarter earnings of $1.60, which beat the consensus of analyst estimates by $0.22. In the past year, the company's stock is up 2.79% excluding dividends (up 5.37% including dividends) and is losing to the S&P 500, which has gained 13.75% in the same time frame. Since initiating my position back on November 19, 2013, I'm up 6.81% inclusive of reinvested dividends and dollar cost averaging. With all this in mind, I'd like to take a moment to evaluate the stock to see if right now is a good time to purchase more for the financials and dividend sector of my portfolio.

Fundamentals

The company currently trades at a trailing 12-month P/E ratio of 11.25, which is inexpensively 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 9.22 is currently inexpensively priced for the future in terms of the right here, right now. Next year's estimated earnings are $5.97 per share and I'd consider the stock inexpensive until about $90. The 1-year PEG ratio (2.83), 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 3.97%. Below is a comparison table of the fundamental metrics for the company for when I wrote all articles pertaining to the company.

Article Date

Price ($)

TTM P/E

Fwd P/E

EPS Next Yr. ($)

My Target Price ($)

PEG

EPS Next Yr. (%)

19Nov13

52.01

23.75

9.04

5.75

86

9.95

2.38

12Feb14

49.88

22.80

8.77

5.70

86

9.46

2.41

02Aug14

52.13

16.39

8.48

6.15

92

1.93

8.48

12Sep14

55.47

14.15

9.09

6.10

92

1.56

9.05

16Nov14

54.53

11.15

8.98

6.07

91

2.02

5.51

24Dec14

55.19

11.25

9.22

5.97

90

2.83

3.97

Financials

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 2.54% with a payout ratio of 29% of trailing 12-month earnings while sporting return on assets, equity and investment values of 0.6%, 8.3% and 4.1%, respectively, which are all respectable values. Because I believe the market may get a bit choppy here and would like a safety play, I believe the 2.54% 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 when I wrote all articles pertaining to the company.

Article Date

Yield (%)

Payout TTM (%)

ROA (%)

ROE (%)

ROI (%)

19Nov13

2.11

50

0.3

3.9

1.1

12Feb14

2.20

50

0.3

3.9

1.1

02Aug14

2.69

44

0.4

5.8

4.1

12Sep14

2.52

36

0.5

6.9

4.1

16Nov14

2.57

29

0.6

8.3

4.1

24Dec14

2.54

29

0.6

8.3

4.1

Technicals

Looking first at the relative strength index chart [RSI] at the top, I see the stock in middle-ground territory with a current value of 55.48. I will look at the moving average convergence-divergence [MACD] chart next. I see that the black line is about to cross above the red line with the divergence bars increasing in height which tells me bullish momentum is in the name. As for the stock price itself ($55.18), I'm looking at $57.09 to act as resistance and the 20-day simple moving average (currently $54.48) to act as support for a risk/reward ratio which plays out to be -1.27% to 3.46%.

New Chief Marketing Officer

A couple of weeks ago, the company announced that there was going to be a new Chief Marketing Officer joining the C-Suite. Esther Lee will be coming from AT&T (NYSE:T) starting January 12, 2015. Esther was Senior Vice President of brand marketing, advertising, and sponsorships back at the telephone giant. Prior to that, she was the global chief creative officer for Coca-Cola (NYSE:KO), but in reality, doesn't Snoopy act as the CMO? MetLife probably has one of the most well-known marketing characters of all companies in the S&P 500. All joking aside, this is a great move because AT&T has had some great marketing for the past several years.

Conclusion

Slow and steady wins the race I suppose, and this company is doing just that. Fundamentally, I believe the company to be inexpensively valued on next year's earnings estimates but expensive on earnings growth potential while having earnings estimates slashed by 1.6% since the last time I wrote about the company. Financially, the dividend is decent and does have much room to grow. On a technical basis, the risk/reward ratio shows me there is more reward than risk right now. Having done this analysis, I'm going to hold off on buying the stock unless it drops below $52.

Because I swapped out Cincinnati Financial Corporation (NASDAQ:CINF) for MetLife in my portfolio, it is only fair that I provide an update from the swap-out date. From November 19, 2013, MetLife is up 6.08%, while Cincinnati Financial is up 1.48% and the S&P 500 is up 15.97%. Keep in mind that I'm up 6.81% on my position because I pick my spots. My change out is performing well against the trade itself, but not against the overall market.

Disclaimer: This article is in no way a recommendation to buy or sell any stock mentioned. 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: The author is long MET, SPY.

The author wrote this article themselves, and it expresses their own opinions. The author is not receiving compensation for it (other than from Seeking Alpha). The author has no business relationship with any company whose stock is mentioned in this article.