Manulife Financial Corp (MFC) and GWG Holdings (GWGH) Critical Review

Manulife Financial Corp (NYSE: MFC) and GWG Holdings (NASDAQ:GWGH) are both finance companies, but which is the superior investment? We will contrast the two businesses based on the strength of their profitability, institutional ownership, valuation, earnings, dividends, risk and analyst recommendations.

Risk and Volatility

Manulife Financial Corp has a beta of 1.3, meaning that its share price is 30% more volatile than the S&P 500. Comparatively, GWG Holdings has a beta of 0.51, meaning that its share price is 49% less volatile than the S&P 500.

Valuation & Earnings

This table compares Manulife Financial Corp and GWG Holdings’ gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Manulife Financial Corp $31.71 billion 1.24 $4.83 billion $1.38 14.43
GWG Holdings $62.55 million 0.95 -$15.50 million ($2.68) -3.82

Manulife Financial Corp has higher revenue and earnings than GWG Holdings. GWG Holdings is trading at a lower price-to-earnings ratio than Manulife Financial Corp, indicating that it is currently the more affordable of the two stocks.

Analyst Recommendations

This is a breakdown of recent ratings and recommmendations for Manulife Financial Corp and GWG Holdings, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Manulife Financial Corp 0 0 5 0 3.00
GWG Holdings 0 0 2 0 3.00

Manulife Financial Corp currently has a consensus price target of $24.00, suggesting a potential upside of 20.54%. GWG Holdings has a consensus price target of $14.50, suggesting a potential upside of 41.46%. Given GWG Holdings’ higher possible upside, analysts plainly believe GWG Holdings is more favorable than Manulife Financial Corp.

Dividends

Manulife Financial Corp pays an annual dividend of $0.66 per share and has a dividend yield of 3.3%. GWG Holdings does not pay a dividend. Manulife Financial Corp pays out 47.8% of its earnings in the form of a dividend. Manulife Financial Corp has raised its dividend for 3 consecutive years.

Institutional and Insider Ownership

46.0% of Manulife Financial Corp shares are held by institutional investors. Comparatively, 42.5% of GWG Holdings shares are held by institutional investors. 77.4% of GWG Holdings shares are held by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.

Profitability

This table compares Manulife Financial Corp and GWG Holdings’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Manulife Financial Corp N/A 11.33% 0.62%
GWG Holdings -21.92% -184.34% 4.35%

Summary

Manulife Financial Corp beats GWG Holdings on 11 of the 15 factors compared between the two stocks.

Manulife Financial Corp Company Profile

Manulife Financial Corporation (MFC) is a holding company of The Manufacturers Life Insurance Company (MLI), which is a life insurance company, and John Hancock Reassurance Company Ltd. (JHRECO), which is a reinsurance company. The Company operates as a financial services company with principal operations in Asia, Canada and the United States. The Company’s segments include Asia Division, Canadian Division, U.S. Division, and the Corporate and Other. The Company operates as Manulife in Canada and Asia and primarily as John Hancock in the United States. The product and service offerings under its Asia, Canadian and U.S. Divisions include Protection, Wealth and Asset Management, and Other Wealth. The Corporate and Other segment includes external asset management business, Property and Casualty (P&C) Reinsurance Business, and run-off reinsurance operations, including variable annuities, and accident and health.

GWG Holdings Company Profile

GWG Holdings, Inc. is the parent company of GWG Life, is a financial services company. The Company is a financial purchaser of life insurance assets in the secondary market. It creates opportunities for consumers owning life insurance to obtain value for their policies as compared to the traditional options offered by insurance companies. It also creates opportunities for investors to participate in alternative asset classes, such as life insurance, not correlated to traditional financial markets. Through its subsidiary GWG Life, LLC, it has developed an option for the life insurance secondary market called LifeCare Xchange (LCX). It provides seniors with the exchange value of their life insurance policies they can apply to long-term care and other post-retirement needs. It generally purchases life insurance assets directly from policy owners having purchased their life insurance in the primary market.

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