MetLife Third Quarter Earnings Preview

MetLife (NYSE:MET) will release its third quarter results on Wednesday, October 31, 2012. Analysts are expecting the company to report a profit of $1.28 a share, up from $1.11 a year ago.



Investors care about earnings because they drive stock prices. Strong earnings generally result in the stock price moving up and vice versa. SEE: Surprising Earnings Results

What to Expect: Analysts are expecting MetLife to report earnings of $1.28 per share, up 15.3% from a year ago, when the company reported earnings of $1.11 per share.

In the last 90 days, this has risen from $1.27. For the fiscal year, analysts are expecting earnings of $5.27 per share.

MetLife's expected revenue of $17.15 billion for the quarter is below last year's reported figure of $20.46 billion by 16.2%. The anticipated revenue for the fiscal year is $67.98 billion.



Company Performance: In the past four quarters, revenue has shown consistent growth. It increased 7.3% to $18.4 billion in the second quarter. Prior to that, the figure rose 4.9% in the first quarter, 30.4% in the fourth quarter of the last fiscal year and 64.4% in the third quarter of the last fiscal year.

Relative to the industry P/E ratio of 7.54, MET's 5.5 is low. A low P/E might arise due to substantial inherent risk of the firm and its operations, poor return on equity, or improper valuation of the market. A company's price/earnings ratio (P/E ratio) provides a measure of how expensive or cheap a stock is. High P/E stocks could be "growth" stocks, while low PE stocks may be "value" stocks. SEE: Can Investors Trust the P/E Ratio?



The stock price has increased from $30.65 on July 30, 2012 to $35.65 over the past quarter. October 17, 2012 to October 24, 2012 marked one of MetLife's worst periods, as the share price fell $2.17.





The Competition: MetLife provides individual insurance, employee benefits, and financial services. Most analysts (15 of 17) rate MetLife a buy. Opinion about the stock has worsened recently, as buy ratings have dropped slightly over the last three months.

The company's closest competitor in the insurance (life) industry is Prudential Public Limited (PUK). Analysts are less optimistic about MetLife than about Prudential Public Limited. Three out of three analysts rate the latter a buy.