Manulife Financial Corp. 2

Sound bite for Twitter and StockTwits is: Stock price is cheap to reasonable. The stock price seems at least reasonable. Insurance companies seem to be making progress lately. They seem to be ready to be dividend growth stocks again. One way to make money is to buy good companies at reasonable prices and hold them for the long term. See my spreadsheet at mfc.htm.

I own this stock of Manulife Financial Corp. (TSX-MFC, NYSE-MFC). In May 2005, I was look for good companies to buy at a reasonable price. This stock met my criteria. I bought some more stock in October 2005, in April 2009 and in April 2013.

The 5 year low, median and high median Price/Earnings per Share are 10.82, 11.78 and 12.98. These are lower than the 10 year corresponding ratios of 12.40, 14.75 and 15.88. The current P/E Ratio is 12.36 based on a stock price of $22.24 and 2015 EPS of $1.80. This stock price test suggests that the stock price is relatively reasonable.

I get a Graham Price of $25.82. The 10 year low, median and high median Price/Graham Price Ratios are 0.89, 1.12 and 1.32. The current P/GP Ratio is 0.86 based on a stock price of $22.24. This stock price test suggests that the stock price is relatively cheap.

I get a 10 year Price/Book Value per Share Ratio of 1.26. The current P/B Ratio is 1.35 a value just 6.8% higher. The current P/B Ratio is based on BVPS of $16.46 and a stock price of $22.24. This stock price test suggests that the stock price is relatively reasonable.

The 5 year median dividend yield 3.54% and this is some 21% higher than the current dividend yield of 2.79%. This stock price test suggests that the stock price is relatively expensive. The historical average dividend yield is 3.27% a value some 14.6% higher than the current dividend yield of 2.79%. This stock price test suggests that the stock price is relatively reasonable.

However, if you look at the historical median dividend yield, it is just 2.20% and this is some 27% below the current dividend yield of 2.79. This stock price test suggests that the stock price is relatively cheap. The current dividend yield is based on a stock price of $22.24 and dividends at $0.62.

When I look at analysts' recommendations I find Strong Buy, Buy and Hold recommendations. Most of the recommendations are a Buy and the consensus recommendation would be a Buy. The 12 month stock price consensus would be $24.60. This implies a total return of 13.40% with 2.79% from dividends and 10.61% from capital gain.

According to Business Wire A. M. Best has put out a special recent report on Canadian Insurance Companies. There is an interesting article from Katia Dmitrieva, Bloomberg News at the Financial Post talking about this company getting rid of its cubicles to save money. There is another interesting article by Barbara Shecter in the Financial Post about Manulife paying DBS Bank $1.2B to sell Life and Health insurance through their Asian Branches.

This is the second of two parts. The first part was posted on Thursday, April 16, 2015 and is available here. The first part talks about the stock and the second part talks about the stock price.

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 here Manulife.

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. I do research for my own edification and I am willing to share. I write what I think and I may or may not be correct.

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