Peer Group Analysis for Manulife Financial (corrected)

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Kenyatta University School of Economics *

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Nov 24, 2024

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1 623 Group Project Student’s Name Professor’s Name Institutional Affiliation Course Date

2 Peer Group Analysis for Manulife Financial In Canada, Manulife Financial is the market leader in insurance and financial services. The next part discusses the peer group study for this company. We chose three of the best companies in the industry to compare with Manulife Financials to get a full picture of how it compares to its competitors: Desjardins Group, Great-West Lifeco, and Sun Life Financial are all insurance companies. Capitalization of the market (market cap) Manulife Financial is one of the stars in its field because it has a large market capitalization. Based on our study, the market value of Manulife Financials is thought to be more than $45 billion (Manulife, 2021). This puts it in direct competition with Great-West Lifeco and Sun Life Financial, whose market capitalizations are about $30 billion and $40 billion, respectively. Since Desjardins is a banking union, it is hard to compare it to other companies (McKillop et al., 2020). Still, the market value of Manulife Financials is about the same as that of its competitors, which shows that it has a strong place in the market. Dividend Yields Investors who want to make money from their investments must look at dividend rates. In the past, Manulife Financial has maintained a strong dividend yield, which has usually been between 3% and 4%. Sun Life Financial and Great-West Lifeco both have dividend rates that are about the same, which makes them both good investments for people who want to make money (Zacks, 2023). The cooperative organization of Desjardins Group could lead to a different way of giving out dividends. The fact that Manulife Financials’ dividend yield is in line with industry norms demonstrates the company's dedication to its shareholders through consistent dividend payments.

3 Multiples and Valuation Examining valuation multiples reveals how investors perceive the growth prospects and risk of a company. In this context, the price-to-earnings (P/E) ratio is a commonly employed multiple (Fernando, 2023). Manulife Financial typically trades at a P/E ratio that is in line with or slightly above the average for the industry, indicating that investors are optimistic about the company's future earnings potential. Sun Life Financial and Great-West Lifeco have comparable P/E ratio tendencies. The distinctive cooperative structure of Desjardins Group may necessitate a unique valuation strategy. In comparison to its industry rivals, Manulife Financials’ valuation multiples reflect a favorable perception. Financial Metrics Comparison We will compare several key financial metrics for Manulife Financial with those of its selected peer group. These metrics include : 1. Revenue Growth: A comparison of Manulife's revenue growth rate with that of its peers over the past few years to assess its ability to capture market share and drive top-line growth. 2. Profitability Metrics: Metrics such as Gross Margin, Operating Margin, and Net Margin will be analyzed to understand how efficiently Manulife is generating profits compared to its competitors. 3. Debt Management: We will assess Manulife's leverage by analyzing Debt-to-Equity Ratio and Interest Coverage Ratio and comparing them with peer group averages. 4. Return on Investment (ROI): We will examine Return on Assets (ROA) and Return on Equity (ROE) to gauge how effectively Manulife is utilizing its assets and equity to generate returns. Key Findings:

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4 Based on the preliminary analysis, we observed the following trends in comparison to the peer group:  Manulife's revenue growth has outpaced the peer group average due to strategic market expansion.  The company demonstrates strong profitability with margins consistently higher than industry peers, reflecting efficient cost management.  Manulife's liquidity ratios indicate a solid position to meet short-term obligations, providing stability in uncertain economic conditions.  The debt management analysis shows that Manulife maintains a balanced debt structure, reducing financial risk.  Return on investment metrics suggest that Manulife generates attractive returns on both assets and equity. Conclusion In summary, our peer group analysis reveals that Manulife Financial maintains a strong competitive position within the insurance and financial services industry. Its market capitalization, dividend yields, and valuation multiples are comparable to or higher than those of its significant competitors. Furthermore, the company's financial numbers show effective financial management and asset usage. These findings underscore Manulife Financial's position as an industry leader, reaffirming the company's capacity to survive in a competitive market setting.

6 References Fernando, J. (2023, March 25). P/E Ratio - Price-to-Earnings Ratio Formula, Meaning, and Examples . Investopedia. https://www.investopedia.com/terms/p/price-earningsratio.asp Hayes, A. (2020, April 30). Leverage Ratio: What It Is, What It Tells You, How To Calculate . Investopedia. https://www.investopedia.com/terms/l/leverageratio.asp Infront. (2023). Manulife Financial Corp.: Financial ratios (MFC | CAN | Life Insurance) - Infront Analytics . Www.infrontanalytics.com. https://www.infrontanalytics.com/fe- EN/30734NC/Manulife-Financial-Corp-/financial-ratios Manulife. (2021). Annual Report Manulife Financial Corporation . https://www.manulife.com/content/dam/corporate/en/documents/investors/MFC_SR_202 1_Y1_EN.pdf McKillop, D., French, D., Quinn, B., Sobiech, A. L., & Wilson, J. O. S. (2020). Cooperative financial institutions: A review of the literature. International Review of Financial Analysis , 71 , 101520. https://doi.org/10.1016/j.irfa.2020.101520 Zacks. (2023, July 17). Manulife Financial (MFC) Could Be a Great Choice . Yahoo Finance. https://finance.yahoo.com/news/manulife-financial-mfc-could-great-154511352.html

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