MetLife has been treading water for the past six months, recording a small return of 4% while holding steady at $79. The stock also fell short of the S&P 500’s 24.4% gain during that period.

Is now the time to buy MetLife, or should you be careful about including it in your portfolio? Dive into our full research report to see our analyst team’s opinion, it’s free for active Edge members.

Why Do We Think MetLife Will Underperform?

We're cautious about MetLife. Here are three reasons we avoid MET and a stock we'd rather own.

1. Declining Net Premiums Earned Reflect Weakness

When insurers sell policies, they protect themselves from extremely large losses or an outsized accumulation of losses with reinsurance (insurance for insurance companies). Net premiums earned are:

• Gross premiums - what’s ceded to reinsurers as a risk mitigation and transfer strategy

MetLife’s net premiums earned has declined by 1.9% annually over the last two years, much worse than the broader insurance industry. This shows that policy underwriting underperformed its other business lines.

2. EPS Barely Growing

We track the long-term change in earnings per share (EPS) because it highlights whether a company’s growth is profitable.

MetLife’s EPS grew at an unimpressive 6.7% compounded annual growth rate over the last five years. On the bright side, this performance was better than its 2.8% annualized revenue growth and tells us the company became more profitable on a per-share basis as it expanded.

3. Substandard BVPS Growth Indicates Limited Asset Expansion

We consider book value per share (BVPS) a critical metric for insurance companies. BVPS represents the total net worth per share, providing insight into a company’s financial strength and ability to meet policyholder obligations.

Disappointingly for investors, MetLife’s BVPS grew at a weak 1.9% annual clip over the last two years.

Final Judgment

MetLife doesn’t pass our quality test. With its shares underperforming the market lately, the stock trades at 2.1× forward P/B (or $79 per share). This valuation tells us it’s a bit of a market darling with a lot of good news priced in - we think other companies feature superior fundamentals at the moment. We’d recommend looking at a dominant Aerospace business that has perfected its M&A strategy.

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