MetLife Pre-earnings Analysis
Chart done on hourly timeframe. Shares of MetLife reached a new all time high in a sympathy move to UnitedHealth Group’s recent earnings jump, but their move will be tested on the company’s upcoming quarterly earnings. The report is set for July 31st and is anticipated to be a big one for the company. Quarter over quarter profits are set to grow from 1.83 to 2.13 per share, their highest projection in the past year. The company has had an inconsistent history when it comes to meeting expectations, so whether or not they could meet the ambitious target is highly uncertain. Their historical trends when it comes to revenue growth have also been flat, mostly plateaued over the years. MetLife has also struggled in terms of profitability, with their net income falling from nearly 7B in 2021 to just 1.58B last year, a significant decline that doesn’t warrant their move to all time highs.
Investors of this company are holding because they can expect consistency, but their growth period seems to be past them. Value and dividend investors may take interest, and it may appeal to some who are looking for a “cheap” valuation in a market filled with inflated prices, but the company has work to do. The good news for them is that they have a consistent source of revenue, but they need to figure out a way to grow their assets and decrease liabilities on the balance sheet, and they need to increase their profit margins to make their valuation more attractive. Although a price to earnings ratio of 26x is relatively on the cheaper side compared to other sectors in the market, it is still on the more expensive side of the 15-25 healthy range (the cheaper the more attractive). MetLife can bring that number down even further if they can increase their profit margins back to where they were a few years ago, which is likely what investors are banking on for this upcoming earnings release.
Option chain analysis:
There’s absolutely no way of telling how a company will react to earnings. Sometimes the company meets all their expectations, but their leaders end up saying something on the call that triggers a sell-off, or vice versa. There are ways to predict how large the post earnings move may be though, and according to the options market, we see that traders expect MetLife to move about $5.69 between now and August 16th, the direction of that move depends on the earnings outcome.