I am reviewing this stock (TSX-MFC) today, as this is a stock I have and I follow. I also for a short time worked for this company in Toronto. When I was working, I only worked for Life Insurance Companies. I last reviewed this stock in April 2009 after I updated my spreadsheet because of the 2008 Annual report. The reason for the review is that Manulife has just announced a dividend decrease of 50%.
I first bought this company in May 2005. On this purchase, to date including dividends I have lost less than 2%. I also purchased more stock in July and August 2006, to date, I have lost some 5.7% on this stock. The price of this stock is higher now that at the end of 2008. According to my spreadsheet, if anyone held this stock for 5 years to 2008 they would have made over 3% return per year and if they had held it for 10 years to 2008, they would have made over 11% per year. This is what occurs on good stock over the long term, no matter what crazy stuff happens in the stock market.
Since the dividend decrease is taking place after two dividend payment for 2009, the full extent of the decrease will not come into effect for the stockholders until 2010. Some analysts were expecting this, and some were not. Some analyst think that this dividend cut was unnecessary and other feel that it was the right move. Some think it is a brave move as most Canadian financial corporations, especially banks, would not do the same thing in the same circumstance.
I looked at Insider Buying and Insider Selling on this company and there was significant selling at the end of 2008 and very little has happened since. There was some insider selling on August 6, 2009, but this was concerning less than 6,000 shares and is therefore insignificant. Of course, you never know why people sell.
When I look at analysts’ recommendations, the consensus is a Buy. There are about as many Strong Buys as there are Holds. There are fewer Buys. The consensus therefore ends up as a Buy, half way between Strong Buy and Hold. (See my site for information on analyst ratings.) Even analysts that were surprised by the dividend decrease continue to rate this stock a buy. There are not rating that I can find lower than a Hold. So, this stock is still very well thought of.
I notice since I last looked at this stock in April 2009, that all the analysts have down graded their earning estimates. I have updated my spreadsheet with the new estimates and updated it with some figures from the 1st quarterly report. Some figures for the 2nd quarterly report are out, but the company has yet to publish a complete set of financial statements.
Even with the downgraded earning estimates, this stock is about at the Graham Price. The Price/Book Value is less than 60% of the 10 year average for this ratio. These both point to a current good price. However, the current P/E is about 17 and this point to an acceptable, rather than a great price. Personally, I will continue to hold my shares and unless this stock falls greatly, I will not buy anymore.
This is a life insurance company in the financial services business. It offers financial protection products (e.g. Life Insurance) and wealth management services (i.e. segregated funds, mutual funds and pension products). They sell products to individuals and business. They are an international company, selling in Canada, US and Asia. This company is listed on Canadian, US, Hong Kong and Philippines Stock Exchanges. Its web site is www.manulife.com. See my spreadsheet at www.spbrunner.com/stocks/mfc.htm.
This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website at www.spbrunner.com/stocks.html for a list of the stocks for which I have put up spreadsheets.
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