Manulife Financial (NYSE:MFC) and Independence (NYSE:IHC) Critical Review

Manulife Financial (NYSE:MFC) and Independence (NYSE:IHC) are both finance companies, but which is the superior stock? We will compare the two businesses based on the strength of their profitability, institutional ownership, risk, valuation, analyst recommendations, dividends and earnings.

Profitability

This table compares Manulife Financial and Independence’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Manulife Financial 10.43% 13.69% 0.78%
Independence 8.48% 6.74% 2.90%

Analyst Recommendations

This is a breakdown of recent recommendations for Manulife Financial and Independence, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Manulife Financial 0 1 4 0 2.80
Independence 0 0 0 0 N/A

Manulife Financial currently has a consensus price target of $28.50, suggesting a potential upside of 53.72%. Given Manulife Financial’s higher possible upside, equities research analysts clearly believe Manulife Financial is more favorable than Independence.

Institutional and Insider Ownership

46.8% of Manulife Financial shares are held by institutional investors. Comparatively, 18.6% of Independence shares are held by institutional investors. 7.0% of Independence shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.

Dividends

Manulife Financial pays an annual dividend of $0.75 per share and has a dividend yield of 4.0%. Independence pays an annual dividend of $0.40 per share and has a dividend yield of 1.1%. Manulife Financial pays out 35.5% of its earnings in the form of a dividend. Manulife Financial has increased its dividend for 5 consecutive years and Independence has increased its dividend for 7 consecutive years.

Earnings and Valuation

This table compares Manulife Financial and Independence’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Manulife Financial $30.07 billion 1.21 $3.61 billion $2.11 8.79
Independence $350.77 million 1.59 $28.48 million N/A N/A

Manulife Financial has higher revenue and earnings than Independence.

Volatility and Risk

Manulife Financial has a beta of 1.36, suggesting that its stock price is 36% more volatile than the S&P 500. Comparatively, Independence has a beta of 0.28, suggesting that its stock price is 72% less volatile than the S&P 500.

Summary

Manulife Financial beats Independence on 9 of the 15 factors compared between the two stocks.

Manulife Financial Company Profile

Manulife Financial Corporation, together with its subsidiaries, provides financial advice, insurance, and wealth and asset management solutions for individuals, groups, and institutions in Asia, Canada, and the United States. The company offers individual life, and individual and group long-term care insurance; and guaranteed and partially guaranteed annuity products through insurance agents, brokers, banks, financial planners, and direct marketing. It also provides mutual funds and exchange-traded funds, group retirement and savings products, and institutional asset management services through insurance agents and brokers affiliated with the company, securities brokerage firms, financial advisors, pension plan consultants, and banks; and banking products, such as deposit and credit products to Canadian customers. In addition, the company is involved in property and casualty insurance and reinsurance businesses; and run-off reinsurance operations, including variable annuities, and accident and health. Further, it manages timberland and agricultural portfolios; and engages in insurance agency, portfolio and mutual fund management, mutual fund dealer, life and financial reinsurance, and mutual funds marketing businesses. Additionally, the company holds and manages oil and gas properties; holds oil and gas royalties, and foreign bonds and equities; provides investment management, counseling, advisory, and dealer services; and develops and operates hydro-electric power projects. Manulife Financial Corporation was founded in 1887 and is headquartered in Toronto, Canada.

Independence Company Profile

Independence Holding Company, through its subsidiaries, engages in life and health insurance business. The company's dental portfolio includes indemnity and PPO plans for employer groups of two or more lives, and for individuals within affinity groups; vision plans that offer a flat reimbursement amount for exams and materials; and short-term medical products for people with temporary needs for health coverage. It also provides supplemental products, including hospital indemnity, fixed indemnity limited benefit, critical illness, accident medical coverage, and life insurance products to individuals and families; and pet insurance and occupational accident insurance products. In addition, the company offers group long-term and short-term disability products to employers that provide benefit to their employees; New York short-term disability plan that offers temporary cash payments to replace wages lost; and group term life products, such as group term life, accidental death and dismemberment (AD&D), supplemental life and AD&D, and dependent life products. Independence Holding Company markets its products through general agents, independent brokers, and independent producers in 50 states of the United States, the District of Columbia, the Virgin Islands, and Puerto Rico. The company was founded in 1980 and is headquartered in Stamford, Connecticut.

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