Manulife Financial Hits Near 52-Week High: Buy or Wait?

Manulife Financial Corporation's shares closed at $28.87 on Thursday, nearing its 52-week high of $28.89. The stock has seen a significant rally of 30.6% year to date, outperforming both the finance sector and the S&P 500 composite. This growth is attributed to a strong performance in its Asia business, which is expected to contribute increasingly to overall earnings, targeting 50% by 2027 and potentially 75% thereafter. The company has demonstrated efficiency in utilizing shareholders' funds, with a return on equity (ROE) of 16.2%, surpassing the industry average of 15.5%. Manulife anticipates an ROE of over 18% by 2027, indicating a positive growth outlook. The Zacks Consensus Estimate projects earnings per share of $2.72 and $2.86 for 2024 and 2025, respectively, reflecting year-over-year increases. In addition to its strong earnings potential, Manulife is focusing on improving its balance sheet by enhancing liquidity and targeting a leverage ratio of 25%. The company has maintained a free cash flow conversion rate exceeding 100% in recent quarters, showcasing its solid earnings performance. Furthermore, it aims to achieve an expense efficiency ratio of less than 45% in the medium term through accelerated digitalization. Despite these positive indicators, MFC shares are currently trading at a price-to-earnings multiple of 10.23, which is higher than the industry average of 8.40. Investors holding MFC stock are advised to retain their shares due to the company's promising growth prospects, particularly in the Asia market.