Is Manulife Financial’s Asia Expansion a Signal for Further Upside in 2025?

• Curious whether Manulife Financial might be a value opportunity others are missing? You're not alone if you're wondering what the numbers say about where the stock is priced right now.
• Manulife’s share price has climbed 2.4% in the past week and is up 11.1% year-to-date, with 13.6% gains over the last 12 months and a striking 177.3% over five years. This highlights ongoing investor interest and possibly shifting risk perceptions.
• Recent headlines have centered on Manulife’s expansion in the Asian insurance market and ongoing investment in digital platforms. These moves are seen as bullish by many analysts and may be supporting the recent surge in the company’s share price.
• Right now, Manulife scores 3 out of 6 on our key valuation checks, which tells part of the story. Let’s break down the main approaches to figuring out what the company is worth, and stay tuned for a perspective you may not have considered at the end of the article.

Find out why Manulife Financial's 13.6% return over the last year is lagging behind its peers.

Approach 1: Manulife Financial Excess Returns Analysis

The Excess Returns valuation model assesses a company’s ability to deliver returns above the cost of equity on its investments. In the case of Manulife Financial, this model gives us a focused lens on two key metrics: return on equity and the sustainability of excess returns into the future.

Currently, Manulife’s book value stands at CA$28.96 per share. Analysts estimate a stable earnings per share (EPS) of CA$4.70. The company’s cost of equity is CA$1.74 per share, meaning Manulife generates an excess return of CA$2.96 per share. With an average return on equity of 16.49% and a stable book value forecast around CA$28.50 per share, Manulife is projected to continue delivering meaningful excess returns for shareholders. These figures are drawn from analyst estimates and weighted projections, lending further credibility.

The model calculates an estimated intrinsic value by factoring in these returns relative to the company’s equity base and the expected cost of capital. The result indicates that, based on the Excess Returns Model, Manulife’s shares are trading at a 58.0% discount to their estimated intrinsic value. This suggests strong potential for upside if these projections hold true.

Result: UNDERVALUED

Our Excess Returns analysis suggests Manulife Financial is undervalued by 58.0%. Track this in your watchlist or portfolio, or discover 926 more undervalued stocks based on cash flows.

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Manulife Financial.

Approach 2: Manulife Financial Price vs Earnings

The price-to-earnings (PE) ratio is a widely used valuation metric for profitable companies like Manulife Financial because it directly relates the company’s current share price to its profitability. Investors often look to the PE ratio to assess how much they are paying for each dollar of earnings. This is particularly relevant for established firms with a track record of consistent profits.

A company’s PE ratio can vary based on several factors, including growth expectations and perceived risk. If investors expect higher earnings growth in the future, they are typically willing to pay a higher multiple. Conversely, if there are elevated risks or slower growth prospects, the PE ratio tends to be lower. This makes the PE ratio a helpful barometer of market sentiment and future expectations.

Currently, Manulife’s PE ratio stands at 15.25x, slightly above the industry average of 11.70x and also above the average of its peers at 14.71x. However, Simply Wall St calculates a “Fair Ratio” for Manulife at 17.77x. The Fair Ratio goes beyond simple benchmark comparison by factoring in the company’s earnings growth, profit margin, industry characteristics, market capitalization, and risk profile. This proprietary metric provides a more nuanced and tailored perspective on what constitutes a reasonable valuation for Manulife specifically.

Because Manulife’s current PE ratio is below its Fair Ratio, the stock appears undervalued on this basis. This could indicate the market is underestimating its future potential and current performance.

Result: UNDERVALUED

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover 1433 companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your Manulife Financial Narrative

Earlier we mentioned that there's an even better way to understand valuation, so let's introduce you to Narratives.

A Narrative is a simple, powerful tool that lets you define your perspective on Manulife Financial’s story. Here, you can outline where you believe the company is headed and why, combining your outlook for future revenue, earnings, margins, and what you consider its fair value to be.

Unlike traditional approaches that stop at numbers, Narratives link Manulife’s journey, including its business drivers and risks, directly to forecasts and a fair value estimate. This creates a complete investment story that reflects your own viewpoint.

On Simply Wall St, this is made easy and accessible in the Community page, allowing millions of investors to share, compare, and update their narratives as news and earnings emerge.

Narratives empower you to make sharper decisions by visually comparing your fair value with the live price. This makes it possible to act when there is a clear opportunity, whether that means buying, holding, or selling.

As an example, different investors currently set their Manulife Financial fair values anywhere from CA$39.00 if they are cautious about regulatory and credit risks, to CA$50.00 if they are optimistic about Asia expansion and digital innovation. This demonstrates how your personal convictions can shape your decision and adjust dynamically as new information becomes available.

Do you think there's more to the story for Manulife Financial? Head over to our Community to see what others are saying!

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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