Manulife Financial Investors Disappointed Despite a Strong Second Quarter

Q2 net income at Manulife Financial Corporation (TSX: MFC) surged two fold from a year earlier

SmallCapPower | August 11, 2017: Manulife Financial Corporation (TSX: MFC) late Wednesday announced Q2 results with net income surging two-fold to reach $1,255 million in 2Q17, as compared with $704 million in the prior-year quarter. The increase in net income attributed to shareholders primarily reflects growth in core earnings, more favorable investment-related experience and an improvement in the direct impact of markets.

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Manulife Financial Corporation achieved total assets under management and administration of $1.0 trillion as at June 30, 2017, an increase of 6% compared with December 31, 2016, driven by favorable investment returns and continued positive net flows. Manulife Financial reported core EBITDA from wealth and asset management businesses of $369 million in 2Q17, an increase of 24% compared with 2Q16. The increase in core EBITDA primarily relates to higher fee income on higher average asset levels driven by favorable investment returns and positive net flows.

Despite this, shares of Manulife Financial fell 5% to close at $24.43 on Thursday.

Donald Guloien, Chief Executive Officer, stated, “This was another solid quarter, with strong operating performance reflected in core earnings of $1.17 billion and net income of $1.26 billion. Our global businesses continued to perform well and we delivered strong investment-related experience gains.”

Additionally, Manulife Financial Corporation’s Board of Directors announced a quarterly shareholders’ dividend of $0.205 per share on the common shares payable on and after September 19, 2017 to shareholders of record at the close of business on August 22, 2017.

In terms of valuation, Manulife Financial Corporation currently trades at TTM price to sales value of 1.05x, price to book value of 1.31x and trailing P/E of 16.82x.

Disclosure: Neither the author nor any of the principals at Small Cap Power, or their family members, own shares in any of the companies mentioned above.

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