Unum Group UNM has been in investors’ good books owing to disciplined sales trends, strong persistency, favorable benefits experience and solid capital position.
Optimistic Growth Projections
The Zacks Consensus Estimate for Unum Group’s 2023 earnings is pegged at $6.66, indicating a 7.2% increase from the year-ago reported figure on 2.7% higher revenues of $12.33 billion. The consensus estimate for 2024 earnings is pegged at $7.05, indicating a 5.8% increase from the year-ago reported figure on 3.3% higher revenues of $12.74 billion.
The expected long-term earnings growth rate is 8.10%, which is higher than the industry average of 6.6%.
Northbound Estimate Revision
Estimates for 2023 and 2024 have moved up nearly 0.7% and 1.6%, respectively, in the past 30 days, reflecting investors’ optimism.
Earnings Surprise History
Unum Group has a decent earnings surprise history. It beat estimates in three of the last four quarters and missed in one, the average beat being 32.25%.
Zacks Rank & Price Performance
UNM currently carries a Zacks Rank #2 (Buy). In the past year, the stock has rallied 24.9% against the industry’s decline of 2.5%.
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UNM has a favorable VGM Score of A. VGM Score helps to identify stocks with the most attractive value, the best growth and the most promising momentum.
Back-tested results show that stocks with a VGM Score of A or B, when combined with a Zacks Rank #1 (Strong Buy) or 2 offer the best investment opportunities.
UNM shares are trading at a discount than the industry average. Its price-to-book value of 0.84X is lower than the industry average of 1.44X. Before the valuation expands, it is preferable to take a position in the stock.
Unum Group has an impressive Value Score of A. Value stocks have a long history of showing superior returns.
Solid operational performance, favorable benefits experience as well as solid top-line growth in the core businesses should continue to fuel growth and help UNM achieve its targeted growth. Management remains focused on moving on to a mix of businesses with higher growth and stable margins. This should help Unum Group’s premium from core business to increase 4-6% over the long term.
Unum U.S. continues to benefit from disciplined sales trends, strong persistency in group lines and growth of new product lines like dental and vision, which improve premium income. On the other hand, favorable risk results should aid Colonial Life. Notably, Unum U.S. and Colonial Life are two of the largest operating segments of Unum.
Unum Group boasts a solid capital position. Sustained solid operating results have been fueling a solid level of statutory earnings and capital, cushioning financial flexibility. Strong statutory earnings might provide an impetus to strong dividend capacity.
Unum Group has consistently enhanced shareholders’ value through dividend hikes and share buybacks. Dividend yield of the company was 3.4%, higher than the industry average of 2.6%, making it an attractive pick for yield-seeking investors.
In December 2022, Unum has approved a share repurchase program that authorizes it to repurchase shares up to $200 million from Jan 1, 2023 through Dec 31, 2023.
Other Stocks to Consider
Some other top-ranked stocks from the insurance industry are CNA Financial Corporation CNA, Everest Re Group, Ltd. RE and Kinsale Capital Group, Inc. KNSL, each sporting a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
CNA Financial beat estimates in two of the last four quarters and missed in the other two, the average being 9.91%. The Zacks Consensus Estimate for 2023 and 2024 has moved 3.9% and 14.3% north, respectively, in the past 60 days.
The Zacks Consensus Estimate for CNA Financial’ 2023 and 2024 earnings per share is pegged at $4.24 and $4.39, indicating a year-over-year increase of 10.4% and 3.5%, respectively. In the past year, CNA has lost 18.9%.
Everest Re beat estimates in each of the last four quarters, the average being 18.41%.
The Zacks Consensus Estimate for RE’s 2023 and 2024 earnings per share is pegged at $45.63 and $53.02, indicating a year-over-year increase of 68.5% and 16.1%, respectively. In the past year, RE has gained 22.4%.
Kinsale Capital has a solid track record of beating earnings estimates in each of the last four quarters, the average being 13.83%. In the past year, KNSL has gained 28.3%.
The Zacks Consensus Estimate for KNSL’s 2023 and 2024 earnings per share is pegged at $9.92 and $11.94, indicating a year-over-year increase of 27.1% and 20.4%, respectively.
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