Fifteen Moat Overvalued Companies: Manulife

Manulife (MFC) is the second largest life insurance firm in North America. It recently bought John Hancock Financial Services. Four years ago, the stock traded for $9. It now changes hands at $33. At $54 billion, the company’s market cap is twices its annual revenue. By contrast, Met Life trades at about 1x revenue.

Manulife has large businesses in insurance, wealth management, and long-term care.

Long-term interest rates are likely to put pressure on the company’s financial performance. BMO Capital Markets recently downgraded the company from “Outperform” to “Market Perform”.

Manulife says that it is focusing on acquistions, so, depending on what kind of firm the company buys, earning could be diluted in the next year or two.

UBS recently dropped its price target on the company because of moderating sale growth.

Good company. Over-bought.

Douglas A. McIntyre can be reached at [email protected]. He does not own securities in companies that he writes about.

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