MFC Hits 52-Week High: Time to Hold Despite Expensive Valuation?

Manulife Financial Corporation MFC hit a 52-week high of $33.07 on June 3. Shares closed at $31.94 after gaining 23.7% in the past year, outperforming the industry, the sector and the Zacks S&P 500 composite in the same time frame.

Manulife Financial has outperformed its peers, including Primerica, Inc. PRI, Reinsurance Group of America, Incorporated RGA and Voya Financial, Inc. VOYA. Shares of PRI have gained 21.8%, while RGA and VOYA shares have lost 1.2% and 11.2%, respectively, in the past year.

With a capitalization of $54.78 billion, the average number of shares traded in the last three months was 2.3 million.

MFC vs Industry, Sector & S&P 500 in 1 Year

MFC Trading Above 50-Day and 200-Day Moving Averages

Shares of Manulife Financial are trading above the 50-day and 200-day simple moving averages (SMA) of $30.55 and $30.12, indicating solid upward momentum. SMA is a widely used technical analysis tool to predict future price trends by analyzing historical price data.

MFC Price Movement vs. 50-Day, 200-Day Moving Average

MFC Shares are Expensive

Manulife Financial shares are trading at a premium to the industry. The company’s price-to-earnings ratio of 10.53X is higher than the industry average of 8.13X. Also, it has a Value Score of A.

The stock is also expensive compared with other players like Reinsurance Group and Voya Financial.

Average Target Price for MFC Suggests Upside

Based on short-term price targets offered by 12 analysts, the Zacks average price target is $34.84 per share. The average suggests a potential 8.9% upside from the last closing price.

MFC’s Growth Projection Encourages

The Zacks Consensus Estimate for Manulife Financial’s 2025 earnings per share indicates a year-over-year increase of 4.2%. The consensus estimate for 2026 earnings per share indicates an increase of 7.7% from the corresponding 2025 estimates. MFC beat earnings estimates in three of the past four quarters and missed in one, with an average surprise of 4.11%.

Optimist Analyst Sentiment on MFC

Three of the six analysts covering the stock have raised estimates for 2025, and five of the six analysts have raised the same for 2026 over the past 30 days. Thus, the Zacks Consensus Estimate for 2025 and 2026 earnings has moved up 2.8% and 2.2%, respectively, in the past 30 days.

Manulife Financial’s Higher Return on Capital

Return on equity in the trailing 12 months was 15.8%, better than the industry average of 15.3%. This highlights the company’s efficiency in utilizing shareholders’ funds.

Key Points to Note for MFC

As its Asia business is reaping solid operational results, Manulife Financial targets to account for half of its core earnings by 2025 and play a crucial role in its long-term growth. Thus, the insurer is continually scaling up its business across Asia. We believe MFC is well-poised to benefit from continued business growth momentum, higher expected earnings on insurance contracts and higher expected investment earnings, with notable growth from the largest in-force business, Hong Kong and expanding distribution network.

Manulife Financial is expanding its Wealth and Asset Management business and has identified Europe (and the wider EMEA market) as a significant growth area. It is making long-term investments in this region. 

MFC has been accelerating growth in the highest-potential businesses. Its inorganic growth is impressive, as this life insurer prudently deploys capital in high-growth, less capital-intensive and higher-return businesses.

Banking on its sturdy capital position, MFC distributes wealth to shareholders through higher dividends and share buybacks. The company has increased its dividend at a seven-year CAGR of 10% and targets a 35-45% dividend payout over the medium term. 

MFC is strengthening its balance sheet and thus targets a leverage ratio of 25%. Notably, its free cash flow conversion has remained more than 100% over the last few quarters, reflecting its solid earnings.

Conclusion

Manulife Financial is set to grow on solid Asia business, growing Wealth and Asset Management business, strong free cash flow conversion ratio and a solid capital position. A medium-term expense efficiency ratio target of less than 45%, banking on diligent expense management, should drive growth. 

Positive analyst sentiment as well as favorable growth estimates should continue to benefit the insurer over the long term. 
Consistent wealth distribution makes it an attractive pick for yield-seeking investors and favorable ROE also poises MFC for growth. MFC also has a VGM Score of B. Stocks with a favorable VGM Score are those with the most attractive value, best growth and most promising momentum compared with peers. 

Given the premium valuation, investors should wait for a better entry point for this Zacks Rank #3 (Hold) stock. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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