Critical Review: Manulife Financial Corp (MFC) versus Aflac (AFL)
Manulife Financial Corp (NYSE: MFC) and Aflac (NYSE:AFL) are both large-cap finance companies, but which is the superior business? We will contrast the two companies based on the strength of their analyst recommendations, risk, profitability, earnings, institutional ownership, valuation and dividends.
Risk and Volatility
Manulife Financial Corp has a beta of 1.32, meaning that its share price is 32% more volatile than the S&P 500. Comparatively, Aflac has a beta of 1, meaning that its share price has a similar volatility profile to the S&P 500.
This table compares Manulife Financial Corp and Aflac’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Manulife Financial Corp||N/A||11.55%||0.64%|
Insider & Institutional Ownership
46.7% of Manulife Financial Corp shares are owned by institutional investors. Comparatively, 66.3% of Aflac shares are owned by institutional investors. 3.0% of Aflac shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.
This is a breakdown of recent ratings and target prices for Manulife Financial Corp and Aflac, as provided by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Manulife Financial Corp||0||1||0||0||2.00|
Manulife Financial Corp currently has a consensus price target of $27.00, suggesting a potential upside of 27.96%. Aflac has a consensus price target of $78.40, suggesting a potential downside of 6.50%. Given Manulife Financial Corp’s stronger consensus rating and higher probable upside, research analysts plainly believe Manulife Financial Corp is more favorable than Aflac.
Earnings and Valuation
This table compares Manulife Financial Corp and Aflac’s gross revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||NetIncome||Earnings Per Share||Price/Earnings Ratio|
|Manulife Financial Corp||$40.27 billion||1.04||$2.26 billion||$1.40||15.07|
|Aflac||$22.56 billion||1.46||$2.66 billion||$6.90||12.15|
Aflac has higher revenue, but lower earnings than Manulife Financial Corp. Aflac is trading at a lower price-to-earnings ratio than Manulife Financial Corp, indicating that it is currently the more affordable of the two stocks.
Manulife Financial Corp pays an annual dividend of $0.66 per share and has a dividend yield of 3.1%. Aflac pays an annual dividend of $1.80 per share and has a dividend yield of 2.1%. Manulife Financial Corp pays out 47.1% of its earnings in the form of a dividend. Aflac pays out 26.1% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Manulife Financial Corp has raised its dividend for 34 consecutive years and Aflac has raised its dividend for 3 consecutive years. Manulife Financial Corp is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
Aflac beats Manulife Financial Corp on 11 of the 17 factors compared between the two stocks.
About Manulife Financial Corp
Manulife Financial Corporation (MFC) is a holding company of The Manufacturers Life Insurance Company (MLI), which is a life insurance company, and John Hancock Reassurance Company Ltd. (JHRECO), which is a reinsurance company. The Company operates as a financial services company with principal operations in Asia, Canada and the United States. The Company’s segments include Asia Division, Canadian Division, U.S. Division, and the Corporate and Other. The Company operates as Manulife in Canada and Asia and primarily as John Hancock in the United States. The product and service offerings under its Asia, Canadian and U.S. Divisions include Protection, Wealth and Asset Management, and Other Wealth. The Corporate and Other segment includes external asset management business, Property and Casualty (P&C) Reinsurance Business, and run-off reinsurance operations, including variable annuities, and accident and health.
Aflac Incorporated is a business holding company. The Company is involved in supplemental health and life insurance, which is marketed and administered through its subsidiary, American Family Life Assurance Company of Columbus (Aflac). The Company’s insurance business consists of two segments: Aflac Japan and Aflac U.S. The Company designs the United States insurance products to provide supplemental coverage for people having medical or primary insurance coverage. Aflac U.S. offers accident coverage on both an individual and group basis. The Company offers cancer plans, critical illness plans, and critical care and recovery plans. The Company designs the United States insurance products to provide supplemental coverage for people having medical or primary insurance coverage. Aflac U.S. offers accident coverage on both an individual and group basis. The Company offers cancer plans, critical illness plans, and critical care and recovery plans.
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