Manulife Financial Corporation, Reinsurance Group of America, Kansas City Life Insurance Company, Genworth Financial, Protective Life, ING Groep N.V., Sun Life Financial, and MetLife are the best of the best.
With the insurance industry - and its stocks - picking up steam, it's time to start identifying the best of the best within the group. Here are the best values based on the latest earnings growth, valuation, and projections for 2011.
In most cases when you see triple-digit earnings growth, it's because earnings had fallen away to nothing in the comparison year, so even small increases look big, and there's a corresponding (very) high P/E ratio. Not so with Manulife Financial Corporation (USA) (NYSE:MFC), which grew income by 447% over the last twelve months, but is still sitting on a trailing P/E of 9.5. Even more incredible, Manulife Financial is expected to grow profits by 325% again next year, translating into a P/E of 8.3.
Though it's been batted around quite a bit the last few days, that doesn't change the fact Genworth Financial, Inc. (NYSE:GNW) has been slowly but surely growing its bottom line, by 23% last year, and by a forecasted 76% next year.
The past isn't much to brag about with ING Groep N.V. (ADR) (NYSE:ING), which is sitting on a ttm P/E of 60.8. The 42% improvement of the bottom line this year coupled with the expected 63% increase next year, however, makes this one quite compelling.
Don't think for a minute that small cap life insurer Kansas City Life Insurance Company (NASDAQ:KCLI) is too small or too obscure to not be the real deal. Although volatile (to the point of no net progress) for the better part of this year, the 163% increase in income this year set up a decent P/E of 20.4, but more important, makes next year's projected improvement of 44.1% that much more plausible. That would price Kansas City Life at 16.6 times 2011's earnings.
Sun Life Financial Inc. (USA) (NYSE:SLF) is one of those cases where the 409% increase in earnings over the last four quarters is a little misleading - income was quite weak over the prior year. Nevertheless, 2011's anticipated 22.6% increase in the bottom line (and subsequent P/E of 10.1) makes Sun Life Financial an interesting play.
MetLife, Inc. (NYSE:MET) is one of those few companies that actually shrank earnings over the last twelve months, but that's a deceiving figure that also sets up the opportunity - traders may not realize the whole story, by assuming the worst based on history. The reality is, MetLife is on pace pump up the bottom line by 19% in the coming year.
By far Protective Life Corp. (NYSE:PL) is the most undervalued and underappreciated company on this list today, with a legitimate trailing P/E of 6.9, and a projected P/E of 7.9. After three earnings beats on the last four quarters though, even that forecasted P/E for Protective Life may not optimistic enough.
Don't be fooled by the 3.2% increase in earnings over the last twelve months from Reinsurance Group of America (NYSE:RGA), and don't sweat the mere expectation of a 12.8% increase in income for 2011. Reinsurance Group of America never saw its income dip despite the recession, more than justifying the trailing P/E of 11.0 and the projected one of 7.2.
By the way, one of these stocks is on my Rhino Report watchlist, and about to be officially bought in the Rhino Report portfolio. If you want to know which - and when - we buy, you have to be a subscriber. Give the Rhino Report a risk free test drive today, and get that pick along with all the other money-making insights.
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Lots of stock market news on life insurance companies, the sector is really picking up now. Let’s hope it continues and a steady course to recovery.
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