I have spent many hours, spread over about a week, understanding and performing a valuation on Manulife Financial (TSX: MFC).
Readers that track TSX 60 stocks should know that Manulife (and its chief peers, Sun-Life, and to a lesser degree Great West) has gotten hammered over the past year (-40%) and two year (-65%) interval.
Lower equity valuation is not a sign that the stock is worth purchasing – it could perhaps reflect the fact that the equity was over-valued in the first place. Or maybe it is a signal to purchase.
Unfortunately, I have done enough work on the matter that I won’t be giving too much away (i.e. what my “price range” would be for the equity), but I would suggest to people that get into a similar endeavor to realize that Manulife is not solely in the insurance business.
The other point that people should be aware of is that accounting treatment is crucial in properly understanding the line items listed on the consolidated and segment data. This may make comparisons to US-based businesses not an apples-to-apples procedure.
Finally, investors should realize what implicit “macroeconomic” assumptions they are making before investing in the equity. It is similar to making an implicit bet on the price of oil when you purchase shares in Suncor – obviously you won’t be investing in oil companies if you believe the price of oil is going down.