CIF Stock Recommendation Report (Fall 2012)

Transcription

1 Section(A)Summary Date: 10/31/2012 AnalystName: KristenHecht CIFStockRecommendationReport(Fall2012) CompanyNameandTicker: Metlife(MET) RecommendationBuy:YesNo TargetPrice: $42.00 Sector:Financial Industry:LifeInsurance MarketCap(inBillions): $36, CurrentPrice:$35.03 Morningstar(MS)Fair ValueEst.:$ WKHi:$39.55 MSFVUncertainty: High 52WKLow:$27.60 MSConsiderBuying: $23 Stop LossPrice: $30.00 #ofshrs.o/s(inmillions): 1, EBOValuation:$39.62 MSConsiderSelling: $80.50 EPS(TTM):2.05 EPS(FY1):5.29 EPS(FY2):5.33 MSStarRating:Four NextFiscalYr.End Dec2012 LastFiscalQtr.End: LessThan8WK: YN IfLessThan8WK,next EarningsAnn.Date: AnalystConsensus Recommendation: Outperform ForwardP/E:6.43 MeanLTGrowth:13.1% PEG:.49 Beta:1.95 %Inst.Ownership: 75.37% Inst.Ownership Net Buy:YN ShortInterestRatio:3.1 RatioAnalysis Company Industry Sector P/E(TTM) P/S(TTM) P/B(MRQ) P/CF(TTM) DividendYield TotalDebt/Equity(MRQ) NetProfitMargin(TTM) ROA(TTM) ROE(TTM) Shortas%ofFloat:3.5% 1

2 2 Summary Providebriefsummaryofyouranalysisineachsection thatfollows CompanyProfile:MetLifeisaninsurance,annuityand employeebenefitscompanythatoperatesinover50 countries,andisthelargestlifeinsurerintheu.sand Mexico. FundamentalValuation:The1yearabovenormal growthrateichooseyieldedaneboof$39.62whichis ahigherpricethanthecurrentpriceformetlife, howeverahighbetamayhavemadethisnumber unreliableinestimatingthetruevalueofthestock. RelativeValuation:Themedianimpliedpricesforfive ofthesixmetricswereintherangeof$37.85 $66.16, whichsuggeststhatmetlifeisslightlyundervalued whencomparedtoit scompetitors. RevenueandEarningsEstimates:Whilerevenueshave yieldednosurpriseornegativesurprisesinfourofthe lastfivequarters,epshavehadpositivesurprisesinall ofthelastfivequarters. AnalystRecommendations:Thereanalystsrecommend anoutperformrating,andtherehavebeenverylittle changesinthelast3months.thereuter smeanrating is1.85. InstitutionalOwnership:Whilethereis75.43% institutionalownership,thereisaslightnetdecreasein ownershipoverthelastthreemonths. ShortInterest:Theshortinteresthasincreasedinthe lasttwoweeksandhasbeenveryvolatileinthelast year,thedays to coverhasalsobeenveryvolatileand MetLifehadmuchhigherdays to coverthanit scloset competitorprudential,andslightlylargershortratio, andshort%offloat.overallitisabearishindication. InvestmentThesis MetLifeisthelargestlifeinsurerintheU.S andidon tseethatpositionchanginginthe future,butidon tseethatpositioncreating valueforthecifintheshorttimehorizon wehave.metlifeiscurrentlyexitingthe bankingsectorandattemptingtolessenthe riskintheirportfolio.thisbusiness restructuringcouldpositivelyaffecttheir businessinthelongrun,aswillthegrowth theyarepursuinginasia,butibelieveitwill taketoolongtoshowinthestockprice.the relativevaluationaswellasthefundamental valuationgivesimpliedpricesslightlyhigher thanwhatmetlifeiscurrentlytradingat.ifi gaveasellrecommendationthetargetprice wouldonlybeafewdollarshigherthan whatitiscurrentlytradingat.metlifedoes nothaveahistoryofconstantlybeating analyst sestimates,andidon tseethis patternchangingdramatically.theshort interesthasbeenveryvolatileoverthelast year,muchmoresothattherecloset competitor,prudential.metlife stop priorityistonolongerbeabankholding companythatisregulatedbythefed,and untilthatiscompletethecompanywon tbe entirelyfreetofocusongrowthand increasingprofits.thelossonderivativesin thethirdquarterthatcontributedtotheir netlossisnotconfidenceboosting,andi fearthiscouldhappenagain.rightnowis notthetimetobuymetlifestock,asitcould experiencevolatilitywhileitrestructuresit s business. StockPriceChart:OverthelastthreemonthsMetLife hasunderperformeditscompetitorswhile outperformingthes&p500andthexlf,whileoverthe lastyearithasstayedveryclosetoit scompetitorsbut hasbeenoutperformedbythes&p500andthexlf again.overallthestockchartsdonotshowthatthe

3 marketexpectsmetlifetodoeitherexceedinglywellor poorinthefuture. 3

4 Section(B) CompanyProfile(twopagesmaximum) CompanySummary MetLifeoffersinsurance,annuitiesandemployeebenefitsprogramstotheU.Sandover50 countries.theyofferlifeinsurance,non medicalhealthinsurance(dental,disability),auto insuranceandhomeinsurance.theyarethelargestlifeinsurancecompanyintheu.sand Mexicoandprovidelifeinsurancefor90%ofthetop100companiesintheFortune500.After theiracquisitionofalicofromaiginnovemberof2010,metlifeservices90millioncustomers worldwide.theyspecializeinprovidinggrouplifeinsurancetolargecorporationswhodon t shopexclusivelybasedonprice.asofthesecondquarterof2012metlifechoosetorestructure it srevenuesintothreesegments,theamericas(74%),asia(18%)emea(6%).theyarealso currentlyregisteredasabankholdingcompany,andduetothatarepartiallygovernedbythe Fed.InMarchtheyfailedtheFed sstresstestandwereblockedbythegovernmentfrom buyingbackstocksorraisingtheirdividend,buthaverecentlybeenattemptingtoexitthe bankingsectorandde registerasabankholdingcompany.asignalofthisgoalistheirrecent announcementtoselltheirmortgageservicingportfoliotojpmorganchaseforanundisclosed amount,aswellastheirdecisionearlierthisyeartoselltheironlinebankingdepositservicesto GE(Metlife.com).TheiracquisitionofALICOin2010signalsMetLife sattemptstoexpandmore intotheglobalmarket,particularlyintheemergingmarketofasia. MetLifedoesofferautoandhomeinsuranceintheNortheast,thusHurricaneSandywillaffect them.howevermetlifeholdsonlya.7%marketshareoftheu.spropertyandcasualty insuranceindustryandthissegmentprovides4.64%ofrevenuesfor2011(seekingalpha.com), sothehurricanewillhaveamuchlargereffectontheinsurancecompaniesthataremore focusedinthepropertyandcasualtyindustry.alsorecentlymetlifereleasedtheirthirdquarter earnings.theyreportedanetlossof$984milliondespiteoperatingrevenuesincreasing47% from2011duetoa$1.6billiononetimeaftertaxgoodwillimpairmentand$467millionlosson derivatives(finance.yahoo.com). BusinessModel,Competition,EnvironmentandStrategy MetLifeoperatesintheextremelycompetitivelifeinsuranceindustry.Theproductsare virtuallynon distinguishablebetweencompanies,sopriceisaveryimportantfactorandprice warsarecommon.metlifeattemptstodifferentiatethemselvesandcreatesustainablereturns byfocusingoncorporateclientsintheu.s,whochooselifeinsurancebasedonconvenience andcostefficiency,andmetlifeisabletocreateinsurancebundlingandtailortheirproductsto 4

5 specificcompanyneeds.metlifealsoispursuinginternationalgrowthandexpanding internationallyespeciallyconcerningasia.forcompaniessuchasmetlifethatmakemostof theirprofitfrompremiumsandfees,acquiringnewclientsiskeytogrowth.withthepurchase oftravelersin2005andalicoin2010,theyareshowingacommitmenttopenetratingtheasian market,andinthefutureseeinternationalrevenuesasanintegralandgrowingpartofthe company. RevenueandEarningsHistory ThisinformationisavailableinReuters.com, Financials tab.copy/pastethequarterly revenueandearningspersharenumbersforthemostrecentthreeyears.addthenumbers overfourfiscalquarterstogetannualrevenueandearnings.forthecurrentfiscalyear,go aheadaddupasmanyquartersasareavailable.note:revenuenumbersare inmillions. Revenue Periods March June September December Annual Note:Amountinmillions(fromReuters) EarningsPerShare Periods March June September December Annual

6 Note:AmountisU.Sdollars(fromReuters) Discussanypatterninrevenueandearnings(e.g.,increasingyearoveryear;seasonal;etc.) ThequarterlyrevenueinMarchandJunehasincreasedforthepastthreeyearsexcludingthe revenuefromthemostrecentthirdquarter.theannualrevenueincreasedfrom2010to2011. Howevertherevenuesdecreasedfromthepastquarterinthethirdandfourthquartersof2010 andthefourthquarterin2011.therearenoeasilyrecognizablepatternsinrevenuegrowth TheEarningsPerSharehasbeensporadicinthepastthreeyears.In2010itincreasedinthe firsttwoquartersanddecreasedinthelasttwoquarters.in2011theepsdecreasedinthe fourthquarter.andin2012thefirstquarterhadanegativeeps,butincreasedinthesecond quarteronlytohaveanothernegativeepsinthethirdquarter.theepsfromthefirstquarter decreasedfrom2010to2011andthen2012aswell. 6

7 Section(C) FundamentalValuation(EBO) Includethefollowinghere: Copy/pastecompletedFundamentalValuation(EBO)Spreadsheet ET PARAMETERS FY1 FY2 Ltg EPS Forecasts % Model 1: 12-year forecasting horizon (T=12). Book value/share (last fye) and a 7-year growth period. Discount Rate 15.15% Dividend Payout Ratio (POR) 57.21%!"#$%#&'()*"($'&$*'&%$+#&,-.%&,#/0"$,#&,(&1(23&()*&%,(3$4#&'#+.5# Next Fsc Year end 2012 You only need to input values to cells highlighted in "yellow" Current Fsc Mth (1 to 12) 11 The rest of the spreadsheet is calculated automatically Target ROE (industry avg.) 4.73% Please read "Guidelines_for_FundamentalValuation_ProfLee_Spreadsheet" file carefully Year Long-term EPS Growth Rate (Ltg) Forecasted EPS Beg. of year BV/Shr Implied ROE OE (Beg. ROE, from EPS forecasts) bnormal ROE (ROE-k) owth rate for B (1-POR)*(ROEt-1) ompounded growth owth*aroe quired rate (k) ompound discount rate v. payout rate (k) dd to P/B PV(growth*AROE) um P/B Add: Perpetuity beyond current yr (Assume this yr's AROE forever) otal P/B (P/B if we stop est. this period) mplied price heck: eg. BV/Shr mplied EPS mplied EPS growth Inputs(providebelowinputvaluesusedinyouranalysis) EPSforecasts(FY1&FY2): 5.27&5.52 Long termgrowthrate: 13.1% Bookvalue/share(alongwithbookvalueandnumberofsharesoutstanding): 7

8 Bookvalue: $59,978million #ofsharesoutstanding: Bookvalue/share: 56.2 Dividendpayoutratio: 57.21% Nextfiscalyearend: 2012 Currentfiscalmonth: 11 TargetROE: 4.73% Output Abovenormalgrowthperiodchosen:1year EBOvaluation(Impliedpricefromthespreadsheet):$39.62 SensitivityAnalysis EBOvaluationwouldbe(youcanincludemorethanonescenarioineachofthefollowing): $41.1 ifchangingabovenormalgrowthperiodto3years $39.62 ifchanginggrowthratefrommean(consensus)tothehighestestimate19.0 $39.62 ifchanginggrowthratefrommean(consensus)tothelowestestimate10.0 $48.75 ifchangingdiscountrateto12% $39.62 ifchangingtargetroeto6% Ichoosea1 yraboveaveragenormalgrowthratebecausethebetaofmetlifeis1.95,andwith theirrestructuringcombinedwithextremesensitivitytoeconomicfluctuations,ididn tfeel comfortableextendingthegrowthrateanyfartherthanoneyearforsuchavolatilestock. 8

9 Section(D) RelativeValuation Copy/pasteyourcompletedrelativevaluationspreadsheethere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romthetoppanel Discusswhetheryourstockanditscompetitorshaveverydifferentmultiples.Pointoutifanyof thefivestockshavemultiplethatisfarofffromtheothers.makeanattempttoexplainwhy (youwouldwanttoreadanalystresearchreportinmorningstardirect;youshouldalsolookfor commentsfromotherfinancialsites).thediscussionsshouldaddressallofthefollowing valuationmetrics:forwardp/e,peg,p/b(mrq),p/s(ttm),andp/cf(ttm). GenerallyMetLifehasverysimilarmultiplestoitscompetitors.MetLife sclosetcompetitoris Prudential.PrudentialisalsoalifeinsurancecompanybasedintheUnitedStates,witha similar,yetsomewhatsmallermarketcap.therangefortheforwardp/eisfrom5.46to10.06, withmetlifelyinginthemiddlewith6.43.becausetherearenooutliersthisyieldsimplied pricesformetlifeof$30.13to$55.52,andmetlife scurrentpriceand52 weekhighlieswithin thatrange.thepegratioalsohasafairlycloserangebetweenthefivecompetitorsof.32to 9

10 .68andMetLifelieswithinthisrangeat.49,whichgivesasimilarimpliedpricerangeasthatof forwardp/ewiththemaindifferencebeingtheimpliedpriceof$23.23thatcomesfroming havingalowerpegthantheothercompetitors.forthep/bratios,fourofthefivecompetitors liewithinacloserangeof.49to.7,withtheoutlierbeingaflac,whohadap/bratioof1.46 whichishighfortheinsuranceindustry(theindustryaverageis1.1).roeshowsthelargest outlier,withaighavinganegativeroeoverthelastfiveyears.thereasonforthisisthat duringthefinancialcrisisaigwasbailedoutbythegovernmentandthishappenedwithinthe lastfiveyears,andtheroeisafiveyearaverage.thep/srangeisfrom.51to.93,andonce againmetlifeliesinthemiddleofthisrangeandaflachasthehighestvalue.pricetocashflow hadalargerrangethantheothermultiples1.67to9.64andmetlifehasap/cfratioof2.4. Becausethisisalargerrangeofmultiples,therangeofimpliedpricesismuchgreaterforthis multiplethantheothers. Fromthebottompanel Discussthevariousimpliedpricesofyourstockderivedfromcompetitors ( comparables ) multiples.howdifferentarethepricesderivedfromthevariousvaluationmetrics?noteany valuationmetricsthatseemtoyieldoutlierpricesandexplainwhy(hint:isthatbecausethat particularvaluationmetricsisnotveryrelevantfortheindustry?doyoubesttoprovide convincingarguments). IgnoringthevaluethatresultedasaresultofAIG snegativeroealmostallthevaluation metricsyieldsimilarimpliedpricesof$23.22to$86.33.therangesofthelowswereallsimilar, aswasthehighsforeachmetric.anoutlieristhepricetocashflowvaluation,whichyields muchhighernumbers.onereasonforthisisthatinthecaseoftheothermultiples,allthe competitorshadverysimilarmultiplesthatwerewithinasmallrange,butnotwithregardsto thep/cfmultiple.theindustryaverageforp/cfis31.33,soallthecompetitorswere significantlyunderthisvalueyettheywereallrelativelyclosetotheindustryaverageforthe othermultiples.thiscouldbeanindicationofwhythemultipleswerehigherforthismetric thanothers.alsothiscouldbeanindicationthatmetlifeiscurrentlyundervalued. Foreachvaluationmetrics,Comparethecurrentpriceand52 weekhigh/lowofyourstockto thehigh lowrangederivedfrommultiplesofitscompetitors. FortheforwardP/Eratio,the52weeklowof$27.60isslightlylowerthanthelowimpliedprice of$30.13,andthe52 weekhighof$39.50islowerthanthehighimpliedpriceof$55.52,and thecurrentpriceisrightinthemiddleofthehigh lowrange.thenumbersarefairlycloseto eachother,andaren tsignificantlydifferentenoughtoindicateanovervaluedorundervalued stockfromthismetric.forthepegratio,thesameholdstrueexceptthatthe52 weeklowis 10

11 slightlyhigherthanthelowimpliedprice.theimpliedpricesfromthep/bratioareslightly different.thehighinthiscaseis$86.33.thiscouldimplyanundervaluedstock,butidon t necessarilyseeitthatway.thepricetobookratioforinsurancecompaniesistraditionallya smallernumber,theindustryaverageis1.1andfouroutofthefourcompetitorshavep/b ratiosunderone,thefactthataflachasahigherprice to bookratiodrivesuptheimpliedprice andisnotatruebullishindicator.thelowimpliedpricefromthevalueratioisskeweddueto AIGhavingtoacceptagovernmentbailouttoavoidbankruptcy.Theothernumbersarefairly lowcomparedtosomeoftheothermetrics,withahighof34.09,whichisveryclosetothe currentpriceof$34.70(november4 th ).Thepricetosalesimpliedpricesaresimilartothose frompricetoequity,thelowis$32.30,whichishigherthanthe52 weeklow,andthehighis $58.92whichishigherthanthe52weekhighandthecurrentpriceresidesinthemiddle.Tome thesesimilarimpliedpricesthatfallclosetothe52weeklowandhighindicatethatthestock mightnotbeeitherfundamentallyovervaluedorundervalued.thepricetocashflowisthe valuemetricthatbreaksthepattern.ithasahighof$142.51,whichismorethanthreetimes the52 weekhigh,butthep/cflowislowerthanthe52 weeklow. Amongthevaluationmetricsanalyzed,whichonesdoyouthinkaremostrelevantasa valuationtoolforyourstock? AmongthevaluationmetricsIanalyzed,threeprovidedsimilarimpliedprices.Thisindicatesto methatthesenumbersmightbeagoodrepresentationoftheactualvalueofmetlife.the threevaluationmetricsareforwardp/e,peg,andp/s. 11

12 Section(E) RevenueandEarningsEstimates Copy/Pastethe HistoricalSurprises TablefromReuters.com, Analysts tab(includeboth revenueandearnings;makenotethatrevenuesmightbein millions ) HISTORICALSURPRISES SalesandProfitFiguresinUSDollar(USD) stimatesvsactual Estimate Actual Difference Surprise% ALES(inmillions) QuarterEndingSep 12 17, , QuarterEndingJun 12 16, , QuarterEndingMar 12 16, , QuarterEndingDec 11 16, , QuarterEndingSep 11 16, , arnings(pershare) QuarterEndingSep QuarterEndingJun QuarterEndingMar QuarterEndingDec QuarterEndingSep EarningsandDividendFiguresinUSDollar(USD) Reviewrecenttrendsincompany sreportedrevenueandearnings,anddiscusswhether(1)the companyhasapatternof surprising themarketwithnumbersdifferentfromanalysts estimates;(2)weretheypositive(actualgreaterthanestimate)ornegative(actuallessthan estimate)surprises?(3)weresurprisesmorenotableforrevenueorearnings?(4)lookupthe stockcharttoseehowthestockpricereactedtothe surprises.note:reutersdoesnotput thesignonthesurprise.youneedtoputa negative signwhenitisanegativesurprise. MetLifehashadahistoryofsurprisingthemarketinbothrevenueandEPS.Howeverthe surprisesforrevenuehavebeennegativeforthreeofthelastfivequarters,andsurprisesfor EPShavebeenpositiveforthelastfivequarters.Theamountofthesurpriseshasbeenslightly largerforepsthanrevenue,withthelargestsurprisebeingthe6.85%surpriseforthequarter 12

13 endingjune2012.thestockpriceofmetlifefellaftereachoftheseearningsreportswere announcedfromthepastfivequarters,otherthanwhentheearningsofjune2012were reported.aftertheearningsofjune2012werereleasedthestockpriceactuallyrosealittle. Copy/pastethe ConsensusEstimatesAnalysis TablefromReuters.com, Analysts tab (includebothrevenueandearnings) CONSENSUS ESTIMATES ANALYSIS Sales and Profit Figures in US Dollar (USD) Earnings and Dividend Figures in US Dollar (USD) # of Estimates Mean High Low 1 Year Ago SALES (in millions) Quarter Ending Dec , , , , Quarter Ending Mar , , , , Year Ending Dec , , , , Year Ending Dec , , , , Earnings (per share) Quarter Ending Dec Quarter Ending Mar Year Ending Dec Year Ending Dec

14 LT Growth Rate (%) %differencehigh&mean %differencelow&mean Salesestimate QDec % 2.79% QMarch % 2.36% YearDec % 1.8% YearDec % 2.46% EPSEstimate QDec % 6.61% QMarch % 5.47% YearDec % 1.74% YearDec % 3.18% LTGrowthRate 31.05% 31% Reviewtherangeandtheconsensusofanalysts estimates.(1)calculatethe%differenceofthe high estimatefromtheconsensus(mean);(2)calculatethe%(negative)differenceofthe low estimatefromtheconsensus;(3)arethedivergentmorenotableforthecurrentorout quarter,fy1orfy2,revenueorearnings?(4)notethenumberofanalystsprovidingltgrowth rateestimate.itthatroughlythesameasthenumberofanalystsprovidingrevenueand earningsestimates? Surprisingly,thedivergentareslightlymorenotableforthecurrentquarterthantheout quarterforbothsalesandeps.ontheotherhandthefy2estimatesaremoredivergentthan thefy1estimates.thesalesestimatesaremoredivergentthantheepsestimates,withthe largestsalesestimatedifferencebeing8.52%,whilethelargestepsestimatedivergencewas 6.61%.Allinalltherangeforthepercentagedifferenceisfrom 6.61%to8.52%.Thereare considerablymoreanalystsprovidingestimatesforsalesandepsthanfortheltgrowthrate. AlsotherearemoreanalystsgivingEPSestimatesthansalesestimates.Thereare16 20 analystsprovidingestimatesforeps,and9 12analystsestimatingsales,whileonly4provided estimatesfortheltgrowthrates. 14

15 Copy/pastethe ConsensusEstimatesTrend TablefromReuters.com, Analysts tab (includeconsensus ESTIMATES TREND Sales and Profit Figures in US Dollar (USD) Earnings and Dividend Figures in US Dollar (USD) Current 1 Week Ago 1 Month Ago 2 Month Ago 1 Year Ago SALES (in millions) Quarter Ending Dec-12 17, , , , , Quarter Ending Mar-13 17, , , , , Year Ending Dec-12 67, , , , , Year Ending Dec-13 70, , , , , Earnings (per share) Quarter Ending Dec Quarter Ending Mar Quarter Ending Dec Quarter Ending Dec bothrevenueandearnings) 15

16 Reviewrecenttrendofanalysts consensus(mean)estimatesonrevenueandearnings.(1)are theconsensusestimatestrendingup,down,orstaythesame?(2)isthetrendmorenotablefor thenear orout quarter,fy1orfy2,revenueorearnings? TheestimatesforsalesofQDec12havetrendeddownwhileQMarch13havetrendedup.The estimatesfortheyearendingdec12anddec13havetrendedbothupanddowninthelast year.howeverthechangesforrevenuehavenotbeensubstantialforanytimeperiod.the estimatesforepshavegenerallystayedthesame,exceptfortheestimatesfrom1yearago,to 2monthsago.ThattrendisconsistentamongbothquartersandFY1andFY2forEPS. Copy/pastethe EstimatesRevisionsSummary TablefromReuters.com, Analysts tab (includebothrevenueandearnings) ESTIMATES REVISIONS SUMMARY Last Week Last 4 Weeks Number Of Revisions: Up Down Up Down Revenue Quarter Ending Dec Quarter Ending Mar Year Ending Dec Year Ending Dec Earnings Quarter Ending Dec

17 Quarter Ending Mar Year Ending Dec Year Ending Dec Reviewthenumberofanalystsrevisingupordowntheirestimates(bothrevenueandearnings) inthelastandlastfourweeks.(1)notewhethertherearemoreupordownrevisions;(2)are therevisionspredominantlyonedirectional?(3)anynotabledifferencelastweekversuslast fourweeks,revenueversusearnings? Therearemoreuprevisionsthandownrevisions.Inthelastweektherehavebeennoup revisionsand1downrevisionforbothrevenueandearnings.inthelastfourweekstherehave beenmoreuprevisionsthandownrevisionsforrevenueandearnings.thelargestchangewas 6uprevisionsfortheyearendingDecemberforrevenues,and9uprevisionsforearningsfor theyearendingdecember12.thefactthattherewerenouprevisionsinthelastweek,when QE3wasannouncedshowsthattheresultsdidnotprovideconfidenceinthestockforanalysts. YouwillneedtoincorporatewhatyouseeherewithMorningstar sanalystresearchreport(you canaccessmorningstardirectatthefinancialmarketslab.)andotherreadings/analysisyou foundfromvariouson linefinancialsites.discusswhetheryouthinkthecompanyhasagood chanceofmakingorbeatinganalystconsensusestimate,andwhy.basedonhowthestockhas beentradinglately,doyouthinkmarkethasalreadyanticipatedstrongorlacklusterfinancial outlookfromthecompany? BasedonthewaythestockforMetLifehasbeentrading,Ithinkthemarketisanticipating averagereturns.overthelastfewweeksmetlifehasseendeclinesinit sstockpricefrom$37 to$34.70amidstnewsthattheywillsella$70milliondollarmortgage servicingportfoliotojp Morganandalossinthethirdquarterduetoagoodwillimpairmentandbusinessrestructuring. However,thedecreaseinstockpricecouldhavebeenmoreseveregiventheearningsandthe predictedeffectsofhurricanesandyupontheinsuranceindustry.morningstargivesthestocka fairvalueof$46.00,whichabout24%greaterthanwhatitiscurrentlytradingat.metlifeis currentlymakinganefforttoleavethebankingindustrywhichshouldstrengthenitspositionby returningthefocusofthecompanytoit scorecompetenciesofofferinglifeinsuranceandalso tonotbedirectlygovernedbythefed.metlifeoperatesinanindustrywithlittleroomfor growthduetosuchintensepricecompetitionanditslargestchangetobeatanalyst sconsensus 17

18 wouldbegoodreturnsinasia.thisisasignificantpossibilityduetoit sacquisitionofalico. RevenuesinAsiawereup17%inthethirdquarter(finance.yahoo.com)andifthistrend continues,metlifecouldcapitalizeontheemergingmarkettostrengthentheirposition. HoweverMorningstargivesMetLifeacratingforbothprofitabilityandgrowthpotential.Based uponitsbusinessmodelandtheindustryitoperatesiniseelittleroomforgrowthotherthan internationally. 18

19 Section(F) Analysts Recommendations Copy/pastethe AnalystRecommendationsandRevisions TablefromReuters.com, Analysts tab.note:makesureyoucopytheentiretableincludingthe MeanRating atthe bottomofthetable. ANALYST RECOMMENDATIONS AND REVISIONS 1-5 Linear Scale Current 1 Month Ago 2 Month Ago 3 Month Ago (1) BUY (2) OUTPERFORM (3) HOLD (4) UNDERPERFORM (5) SELL No Opinion Mean Rating Reviewthetrendofanalystrecommendationsoverthelastthreemonths.Isthereanotable changeofanalystopinions,turningmorebullishorbearish?howmanydifferentratingsout ofthefivepossibleonesdidthecompanyreceivecurrently,one,two,andthreemonthsago? Isthereanotabletrendofopinionconvergenceordivergence?Iswhatyouseehere 19

20 consistenttocommentsinmorningstaranalyst sresearchreportaswellasvariousonline financialsitesyouhadresearchedon? NOTE:OnaFive pointscale,reutersassigns 1 to Buy,themostbullishrecommendation, and 5 to Sell,themostbearishrecommendation.Someotheronlinesiteshaveopposite scale,withtheir 1 beingthemostbearishand 5 beingthemostbullishrecommendations. Therearenosignificantchangesinanalyst srecommendations.threemonthsagotherewas onelessholdrecommendation.twomonthsagoanadditionalanalystgaveaoutperform rating.andcurrentlythereisonelessbuyrecommendationthantherewasamonthago. MetLifecurrentlyhas5buyratings,13outperformratings,and2holdratings,with0sellor underperformratings,tohaveameanratingof1.85.thisisaslightlymorebearishnumber than1.81ofonemonthagoor1.80oftwomonthsago.howeveritmeansthatanalystsare stillbullishonmetlife sstock.thisnumbercoincideswithbothyahoo!financeand Morningstar smoderatebuyratings.italsocoincideswiththeanalyst sreportonmorningstar, whichseesasmallpotentialforgrowthinthiscompetitiveandmatureindustrydueto MetLife spositionintheasianandlatinamericanmarkets.thestockistradingbelowit sfair valueestimateonmorningstarandslightlybelowtheoneyeargrowthestimatefrom Yahoo!Finance. 20

21 Section(G) InstitutionalOwnership Copy/pastethecompleted CIFInstitutionalOwnership spreadsheethere.!"#$%&'()*&*#+,-+.!"#$%"&''"()&!##*##+ /'01'203,%$&450*'!"#$%&'2%3,,%(!#!*!)+ %,%"$'%",$( %$*)&+ /'6%7'80&-*-0+& && &*)&+ /'930&%,'80&-*-0+& (( (*(,+ /':+;$%#&%,'80&-*-0+&!('!&*&(+ /'<%;$%#&%,'80&-*-0+&!&(!&*%)+ =%.>'50*#3':+&*>'80&-*-0+&,-!!##*##+ %,%")!'"--% %$*)!+ ),*(&+!-,"('$ #*#(+ (7+%$&"-B':+10$C#*-0+ 50B'EF':+&*-*)*-0+&'D'(7+%$&"-B A)*)#3'G)+,'D'(7+%$&"-B G30#*'D D'()*&*#+,-+. (&*'#+!*#&+ -(*('+ Combineinformationprovidedinallthreesectionstodiscusswhether(1)institutions,onnet basis,havebeenincreasingordecreasingownershipandhowsignificant,(2)thestockhas sizableinstitutioninterestsandsupport,(3)theextentofthe(>5%)owners,and(4)this couldbeabullishorbearishindicationoffuturestockpricemovement. H'ID'(7+%$&"-B 203,%$'6#C% D'()*&*#+,-+. J%B0$*'<#*% Metlife Policyholder Trust /7/12 21

22 Onanetbasisinstitutionshavebeenincreasingownership,butonaveryinsignificantscale,of.02%gain.Thenumberissosmallthatitdoesnotconcretelyindicatethatinstitutionsare takingabullishviewonmetlife.howevermetlifedoeshave75.43%institutionalownership. Whichishigherthanitsmajorcompetitor,Prudential,whichhas65.43%institutionalownership (reuters.com).itdoesindicatethatinstitutionsingeneraltrustthatmetlifeisasound company,butidonotthinktherecentchangeisalargeenoughnumbertobeabullish indicatoroffuturestockpricemovements.thereisonlyone5%orgreaterinstitutionalholder andthatismetlifepolicyholdertrust.becausethisisasubsidiaryofmetlifewiththesingle purposeofholdingcommonstockofmetlifeandvotingrightsforcertaineligiblepolicyholders ofmetropolitanlife,itisnotasignificantbullishindication ( 22

23 Section(H) ShortInterest(twopages) Fromhttp:// swebsite) Copy/pasteorenterthedatainthefollowingtable.Youalsoneedtocopy/pastethechartto theright. Copy/pasteortypetheinformationfrom shortinterest table.youwillstartfromthemost recentreleasedate,andgobackforayear(somestocksmaynothavedatagobackfora year) Settlement Date Short Interest Avg Daily Share Volume Days To Cover 10/15/ ,630,455 8,727, /28/ ,431,256 10,651, /14/ ,194,747 9,990, /31/ ,769,439 7,144, /15/ ,176,328 9,180, /31/ ,781,889 7,607, /13/ ,846,593 5,839, /29/ ,016,736 8,848, /15/ ,964,751 10,938, /31/ ,604,556 13,117, /15/ ,612,420 8,553, /30/ ,283,195 7,882, /13/ ,464,160 6,826, /30/ ,312,492 9,155, /15/ ,565,252 9,580, /29/ ,513,978 7,544, /15/ ,541,566 7,841, /31/ ,740,671 11,803, /13/ ,774,127 10,215, /30/ ,210,571 7,311, /15/ ,625,944 9,066, /30/ ,534,224 11,874, /15/ ,014,570 9,955, /31/ ,288,321 17,411, /14/ ,801,952 12,862,

24 Copy/pastethecharttotherightofthe shortinterest table,immediatelyfollowthetable below NOTE:Youareencouragedtolookattheshortinterestinformationfortwoofthecompanies closestcompetitors.thiswillhelpgaugewhetherthesentimentindicatedintheshortinterest statisticsiscompanyspecificorindustry wide. 24

25 Fromhttp://finance.yahoo.com/ Completethefollowingtablewithinformationfromthe sharestatistics table. Metlife Inc. Avg Vol Avg Vol Shares (3 month) (10 day) Outstanding Float 9,760,260 16,709, billion million Shares Short Short Ratio Short % of Float Shares Short (Most recent date) (Most recent date) (Most recent date) (2 weeks prior) 29.63million % 28.43million Prudential Avg Vol Avg Vol Shares (3 month) (10 day) Outstanding Float 2,098,550 4,201, million Shares Short Short Ratio Short % of Float Shares Short (Most recent date) (Most recent date) (Most recent date) (2 weeks prior) 6.16million % 4.09million Basedontheshortintereststatisticsanditsrecenttrend,howisthemarketsentimentonthe stock?hasthesentimentturnedmorebullishorbearishoverthelastyear?howaboutin morerecentmonthandwhy? InthelasttwoweekstherehasbeenanincreaseintheshortsalesofMetLifestock.Howeverit hasdecreasedinthelasttwomonths,andisataboutthesamelevelasoneyearago.thisgives amixofbearishandbullishsignals,withnotrendfromthemarketonwhetherornottheyfear thepriceofthestockwillincreaseordecreaseoverthelastyear.howeverwhencomparing thistotheirclosetcompetitor,prudential,theirseemstobeasimilarityinthevolatilityofthe 25

26 shortinterest.bothcompanieshaveseenincreasesintheshortinterestinthelasttwo week period,butremainatapproximatelythesamelevelastheywereayearago.howeverwhile Prudentialhaskeptdays to coverfewerthan2.7inthelastyear,thehighestdays to cover MetLifehasseenwas6.48on7/13/2012(Nasdaq.com).Ithasdecreasedsincethentoaround 3.4days to cover,butthatisstillhigherthanthehighestnumberforprudentialinthelastyear, whichisabearishindicationformetlife.prudentialalsohasasmallershort%offloatandshort ratiothanmetlife.becauseprudentialisaclosecompetitorofmetlife,thefactthattheyhave asmallershortratio,short%offloat,anddays to coverseemstobeabearishindicatorfor MetLife. 26

27 Section(I) StockCharts Athreemonthspricechart Copy/pastethe 3Mos. stockcharthere Aoneyearpricechart Copy/pastethe 1Yr stockcharthere Afiveyearpricechart 27

28 Copy/pastethe 5Yrs. stockcharthere Discusswhatyouobservefromthestockcharts.Thisshouldincludecomparingyourstockto competitors,sector,andsp500overthethreedifferenttimehorizons. Inthethree monthstockchart,metlifeisoutperformingthes&p500andthefinancialsector, butisbeingunderperformedbyitscompetitors.howeverwhenyoulookattheone yearprice chart,thefinancialsectorandthes&p500areoutperformingmetlife.itfollowsprudentialand Allianzsocloselythatyoucouldnotreallysayitoutperformedorunderperformedits competitorsuntilthelastthreemonths.lookingatthefive yearchart,metlifegenerally outperformedthefinancialsectorandit scompetitors,whilebeingoutperformedbythes&p 500.Duringthefinancialcrisisof2008and2009,MetLiferespondedsimilarlytootherfinancial firmsandexperiencedahugedeclineintheirstockprice.atonepointitactuallydecreasedto 80%.Thiscouldbeexpectedfromsuchahighbetastock,butisareminderthatinvestingin highbetastockscanleadtolargedropsinprice. 28

29 MetLife.com.CompanyProfile.AccessedNovember1 st profile/index.html MetLife.com.InvestorRelations.AccessedNovember1 st relations/index.html MetLiferemainsfocusedonbiginternationalgrowth. AccessedNovember5 th metlife remains focused on big international growth MetLifetosell$70billionmortgageservicingportfoliotoJPMorgan. AccessedNovember5 th &cid=1244&source=TheMotleyFool Money.msn.com.MetLifeStocks.AccessedNovember1 st price?symbol=met&ocid=qbe Nasdaq.com.MetLifeStocks.AccessedNovember1st interest Nasdaq.com.PrudentialStocks.AccessedNovember1st interest Reuters.com.MetLifeStocks.AccessedNovember4 th Reuters.com.PrudentialStocks.AccessedNovember4 th Reuters.com.AflacStocks.AccessedNovember4 th Reuters.com.AmericanInternationalGroupStocks.AccessedNovember4 th Reuters.com.INGGroep.AccessedNovember4 th

30 Yahoo!Finance.MetLifeStocks.AccessedNovember4 th Yahoo!Finance.PrudentialStocks.AccessedNovember4 th