Why Manulife Financial Corporation (TSE:MFC) Could Be Worth Watching

By
Simply Wall St
Published
November 25, 2019
TSX:MFC
Source: Shutterstock

Manulife Financial Corporation (TSE:MFC) received a lot of attention from a substantial price increase on the TSX over the last few months. As a large-cap stock with high coverage by analysts, you could assume any recent changes in the company’s outlook is already priced into the stock. However, what if the stock is still a bargain? Let’s take a look at Manulife Financial’s outlook and value based on the most recent financial data to see if the opportunity still exists.

View our latest analysis for Manulife Financial

What is Manulife Financial worth?

Good news, investors! Manulife Financial is still a bargain right now. According to my valuation, the intrinsic value for the stock is CA$50.13, which is above what the market is valuing the company at the moment. This indicates a potential opportunity to buy low. However, given that Manulife Financial’s share is fairly volatile (i.e. its price movements are magnified relative to the rest of the market) this could mean the price can sink lower, giving us another chance to buy in the future. This is based on its high beta, which is a good indicator for share price volatility.

Can we expect growth from Manulife Financial?

TSX:MFC Past and Future Earnings, November 26th 2019
TSX:MFC Past and Future Earnings, November 26th 2019

Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. Manulife Financial’s earnings over the next few years are expected to increase by 35%, indicating a highly optimistic future ahead. This should lead to more robust cash flows, feeding into a higher share value.

What this means for you:

Are you a shareholder? Since MFC is currently undervalued, it may be a great time to accumulate more of your holdings in the stock. With an optimistic outlook on the horizon, it seems like this growth has not yet been fully factored into the share price. However, there are also other factors such as financial health to consider, which could explain the current undervaluation.

Are you a potential investor? If you’ve been keeping an eye on MFC for a while, now might be the time to make a leap. Its buoyant future outlook isn’t fully reflected in the current share price yet, which means it’s not too late to buy MFC. But before you make any investment decisions, consider other factors such as the track record of its management team, in order to make a well-informed buy.

Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on Manulife Financial. You can find everything you need to know about Manulife Financial in the latest infographic research report. If you are no longer interested in Manulife Financial, you can use our free platform to see my list of over 50 other stocks with a high growth potential.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.

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