Sun Life Financial (NYSE: SLF) and Manulife Financial Corp (NYSE:MFC) are both large-cap finance companies, but which is the superior business? We will contrast the two businesses based on the strength of their valuation, profitability, dividends, risk, institutional ownership, earnings and analyst recommendations.

Risk and Volatility

Sun Life Financial has a beta of 0.86, indicating that its share price is 14% less volatile than the S&P 500. Comparatively, Manulife Financial Corp has a beta of 1.3, indicating that its share price is 30% more volatile than the S&P 500.

Dividends

Sun Life Financial pays an annual dividend of $1.39 per share and has a dividend yield of 3.6%. Manulife Financial Corp pays an annual dividend of $0.66 per share and has a dividend yield of 3.4%. Sun Life Financial pays out 43.8% of its earnings in the form of a dividend. Manulife Financial Corp pays out 47.8% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Sun Life Financial has increased its dividend for 3 consecutive years. Sun Life Financial is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Ratings

This is a breakdown of current ratings and target prices for Sun Life Financial and Manulife Financial Corp, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Sun Life Financial 0 8 2 0 2.20
Manulife Financial Corp 0 0 5 0 3.00

Sun Life Financial currently has a consensus price target of $47.25, suggesting a potential upside of 23.46%. Manulife Financial Corp has a consensus price target of $24.00, suggesting a potential upside of 23.33%. Given Sun Life Financial’s higher probable upside, research analysts clearly believe Sun Life Financial is more favorable than Manulife Financial Corp.

Earnings and Valuation

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

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Sun Life Financial $20.02 billion 1.17 $2.94 billion $3.17 12.07
Manulife Financial Corp $31.30 billion 1.23 $4.76 billion $1.38 14.10

Manulife Financial Corp has higher revenue and earnings than Sun Life Financial. Sun Life Financial is trading at a lower price-to-earnings ratio than Manulife Financial Corp, indicating that it is currently the more affordable of the two stocks.

Profitability

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

Net Margins Return on Equity Return on Assets
Sun Life Financial 12.48% 13.29% 1.03%
Manulife Financial Corp N/A 11.33% 0.62%

Insider and Institutional Ownership

40.9% of Sun Life Financial shares are owned by institutional investors. Comparatively, 46.0% of Manulife Financial Corp shares are owned by institutional investors. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.

Summary

Sun Life Financial beats Manulife Financial Corp on 9 of the 16 factors compared between the two stocks.

About Sun Life Financial

Sun Life Financial Inc. is the holding company of Sun Life Assurance Company of Canada. The Company is a financial services company providing a range of insurance, wealth and asset management solutions to individuals and corporate Clients. It operates through five segments. The Sun Life Financial Canada segment provides retail insurance and investment advice, products and services to people across Canada. The SLF U.S. segment has three business units: Group Benefits, International and In-force Management. Its Sun Life Financial Asset Management segment consists of MFS Investment Management and Sun Life Investment Management. The SLF Asia segment operates through subsidiaries in the Philippines, Hong Kong, Indonesia and Vietnam, as well as through joint ventures and associates with local partners in the Philippines, India, China and Malaysia. Its Corporate segment includes SLF U.K. and Corporate Support. Corporate Support operations consist of its Run-off reinsurance business.

About Manulife Financial Corp

Manulife Financial Corporation (MFC) is a holding company of The Manufacturers Life Insurance Company (MLI), which is a life insurance company, and John Hancock Reassurance Company Ltd. (JHRECO), which is a reinsurance company. The Company operates as a financial services company with principal operations in Asia, Canada and the United States. The Company’s segments include Asia Division, Canadian Division, U.S. Division, and the Corporate and Other. The Company operates as Manulife in Canada and Asia and primarily as John Hancock in the United States. The product and service offerings under its Asia, Canadian and U.S. Divisions include Protection, Wealth and Asset Management, and Other Wealth. The Corporate and Other segment includes external asset management business, Property and Casualty (P&C) Reinsurance Business, and run-off reinsurance operations, including variable annuities, and accident and health.

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