- Wondering if MetLife at around US$69 a share still offers value, or if the easy money has already been made? This breakdown is designed to give you a clear, valuation focused view.
- The stock is down around 2.3% over the last week, 10.5% over the last month, and 13.9% year to date. However, the 3 year and 5 year returns of 33.2% and 33.9% tell a different story over longer horizons.
- Recent attention on MetLife has centered on how insurers are positioned as markets reassess interest rate expectations and the sector's role in long term savings products. In addition, broader discussions about financial stability and capital strength across insurers have kept large names like MetLife on many investors' watchlists.
- MetLife currently scores a 4 out of 6 valuation check score. The next sections will walk through the main valuation methods that sit behind that score, and then finish with a more holistic framework for thinking about what the stock might be worth.
Find out why MetLife's -13.3% return over the last year is lagging behind its peers.
Approach 1: MetLife Excess Returns Analysis
The Excess Returns model looks at how much profit a company is expected to generate above the return that shareholders require, then capitalizes those “extra” profits into an estimated per share value.
For MetLife, the starting point is a Book Value of US$43.33 per share and a Stable Book Value estimate of US$51.41 per share, based on future book value estimates from 5 analysts. On those equity levels, analysts see Stable EPS of US$8.21 per share, sourced from weighted future return on equity estimates from 7 analysts.
The model uses a Cost of Equity of US$3.59 per share, which implies an Excess Return of US$4.62 per share. That excess is linked to an Average Return on Equity of 15.97%, suggesting the business is expected to earn more on its equity base than the model assumes investors require.
Putting these inputs together, the Excess Returns model arrives at an intrinsic value of about US$180.93 per share. Against a recent share price around US$69, this indicates the stock is about 61.8% undervalued on this method.
Result: UNDERVALUED
Our Excess Returns analysis suggests MetLife is undervalued by 61.8%. Track this in your watchlist or portfolio, or discover 47 more high quality undervalued stocks.
Approach 2: MetLife Price vs Earnings
P/E is often the go to multiple for profitable companies because it links what you pay directly to the earnings they generate per share. It lets you quickly see how much the market is charging for each dollar of profit.
What counts as a "normal" P/E depends on how fast earnings are expected to grow and how risky those earnings are. Higher expected growth or lower perceived risk can support a higher P/E, while slower growth or higher risk usually point to a lower P/E being more reasonable.
MetLife currently trades on a P/E of 14.21x. That is close to the peer average of 14.15x and above the broader Insurance industry average of 11.35x. Simply Wall St also calculates a Fair Ratio of 16.78x for MetLife, which reflects factors such as earnings growth, profit margins, its industry, market cap and specific risks.
This Fair Ratio is more tailored than a simple peer or industry comparison because it adjusts for MetLife's own characteristics rather than assuming all insurers should trade on similar multiples. With the current P/E at 14.21x versus a Fair Ratio of 16.78x, the shares screen as undervalued on this metric.
Result: UNDERVALUED
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Upgrade Your Decision Making: Choose your MetLife Narrative
Earlier it was mentioned that there is an even better way to understand valuation, so on Simply Wall St's Community page you can use Narratives. In this tool you set out your story for MetLife, link that story to a forecast for revenue, earnings and margins, translate it into a fair value, and then compare that fair value with the current price. The tool updates as new news or earnings arrive. One investor might build a more optimistic MetLife Narrative around international growth, digital transformation and a fair value near the higher analyst target of US$108.0. Another might focus on risks like interest rate sensitivity, reserve uncertainty and technology execution, and anchor closer to the lower target of US$72.0. Both investors can use the same framework to decide whether the current price looks attractive or stretched.
Do you think there's more to the story for MetLife? 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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