Does Manulife’s Surging Five Year Return Signal More Value Ahead in 2025?
- Wondering if Manulife Financial is fairly priced, undervalued, or perhaps hiding untapped opportunity? You are not alone, and a closer look might just surprise you.
- While the stock barely shifted over the last week at -0.6%, it has gained 3.3% for the year to date and delivered a dramatic 208.4% return over the past five years, which has definitely caught the attention of growth-oriented investors.
- Manulife’s momentum comes amid growing buzz around the insurance sector. Analysts have been highlighting the company’s expanding presence in Asia and recent moves to streamline U.S. operations. These headlines help explain the notable price moves and set the stage for an even deeper dive.
- On our value score, Manulife hits 4 out of 6 undervalued checks, meaning it stands out in several key areas. Next up, we will break down exactly how that score is determined with traditional valuation approaches and hint at an approach that goes a step further. Stay tuned.
Find out why Manulife Financial's 14.8% return over the last year is lagging behind its peers.
Approach 1: Manulife Financial Excess Returns Analysis
The Excess Returns model evaluates a company’s ability to generate returns above its cost of equity, providing insight into whether investments are likely to create additional value for shareholders. For Manulife Financial, this model highlights its strong capital efficiency and growth outlook.
According to projections, Manulife’s Book Value is CA$27.81 per share and its Stable Earnings Per Share (EPS) is CA$4.34, based on the weighted future Return on Equity estimates from 7 analysts. The company’s cost of equity is CA$1.66 per share, resulting in an Excess Return, which is a measure of profit above what investors require, of CA$2.67 per share. With an average Return on Equity of 15.65% and a Stable Book Value estimated at CA$27.71 per share (sourced from 4 analysts), Manulife demonstrates a consistent ability to generate value from its invested capital.
After running the numbers, the Excess Returns methodology estimates Manulife’s intrinsic value per share at CA$106.40. With the current share price trading well below this figure, the model suggests a sizable 57.3% undervaluation, a significant margin of safety that is not often seen in large-cap stocks.
Result: UNDERVALUED
Our Excess Returns analysis suggests Manulife Financial is undervalued by 57.3%. Track this in your watchlist or portfolio, or discover 840 more undervalued stocks based on cash flows.
Approach 2: Manulife Financial Price vs Earnings
The price-to-earnings (PE) ratio is a widely accepted valuation tool for profitable companies like Manulife Financial, as it directly measures how much investors are willing to pay for each dollar of earnings. When a company has consistent profits and stable earnings growth like Manulife, the PE ratio offers a clear window into how the market values its current and future performance.
It is important to remember that a "normal" or "fair" PE ratio is shaped by expectations of future growth and perceived risk. Companies with higher growth prospects or lower risks often command higher PE ratios, while slower-growing or riskier firms tend to trade at a discount to peers.
Manulife currently trades at a PE ratio of 14.1x, which is just below the peer average of 14.9x and noticeably higher than the wider insurance industry average of 11.8x. However, instead of relying on broad sector comparisons, Simply Wall St's Fair Ratio takes into account Manulife’s specific growth, profit margins, risks, and size. It arrives at a Fair Ratio of 16.6x. This proprietary measure is designed to be more precise, as it factors in the nuances that set Manulife apart from both its peers and the broader industry.
Comparing Manulife’s present PE ratio of 14.1x against its Fair Ratio of 16.6x, the stock appears to be undervalued on this metric. This suggests some upside potential based on its fundamentals.
Result: UNDERVALUED
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Upgrade Your Decision Making: Choose your Manulife Financial Narrative
Earlier we mentioned that there is an even better way to understand valuation, so let's introduce you to Narratives. A Narrative is a story, your personal perspective about a company, that connects the real-world business outlook and strategy to its future financials and fair value. Narratives help you articulate how you think Manulife’s revenue, earnings, margins, and risks might evolve over time, then link those forecasts directly to a fair value estimate using clear, explainable numbers.
These Narratives are easy to create and update within the Simply Wall St Community page, making it accessible for millions of investors to create, compare, and learn from different viewpoints. Narratives help you decide when to buy or sell by showing you in real time how your estimated Fair Value stacks up against the latest Price, all while automatically updating when new data, news, or earnings arrive.
For example, recent Manulife analyst Narratives range from the most optimistic, targeting CA$50.0 per share by 2028 with strong growth assumptions, to the most cautious at CA$39.0, reflecting concerns around risks like Asian market slowdowns or legacy business volatility. Regardless of whether your story leans bullish or conservative, Narratives clearly lay out your logic and keep your investment decisions grounded in the numbers that matter most.
Do you think there's more to the story for Manulife Financial? 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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