Here's Why You Should Consider Betting on Unum (UNM) Stock Now
Unum Group UNM is well-poised for growth, driven by disciplined sales trends, strong persistency, favorable benefits experience and solid capital position.
Optimistic Growth Projections
The Zacks Consensus Estimate for Unum Group’s 2022 earnings is pegged at $6.21, indicating a 42.76% increase from the year-ago reported figure on 0.7% higher revenues of $12 billion. The consensus estimate for 2023 earnings is pegged at $6.25, indicating a 0.6% increase from the year-ago reported figure on 2.2% higher revenues of $12.3 billion.
The expected long-term earnings growth rate is 12.2%, which is higher than the industry average of 8.6%.
Earnings Surprise History
Unum Group has a decent earnings surprise history. It beat estimates in each of the last four quarters, the average beat being 34.9%.
Zacks Rank & Price Performance
UNM currently carries a Zacks Rank #2 (Buy). In the past year, the stock has rallied 55.1%, outperforming the industry’s increase of 19.2%.
Image Source: Zacks Investment Research
Style Score
UNM has a favorable VGM Score of B. 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.
Business Tailwinds
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. Adjusted operating income should gain from favorable benefits experience in group product lines and higher premium income.
The Unum International segment remains well poised for growth on improved underlying benefits experience, particularly in the group lifeline, growth in the in-force block and a higher exchange rate.
Sales in both Unum UK and Unum Poland are likely to boost the international business segment of Unum Group.
Higher net investment income, favorable benefits experience and premium income should drive the adjusted operating income of the Colonial Life Segment. This segment should gain from higher sales in prior periods, higher overall persistency, improving premium income and favorable risk results.
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.
Banking on operational excellence, Unum Group increased dividends, which witnessed a nine-year CAGR (2014-2022) of 8%. The dividend yield is currently 3.3%, better than the industry average of 2.3%. In the first nine months of 2022, the company paid dividends of $189.5 million and repurchased shares for $137.5 million. UNM expects $200 million worth of shares buyback annually through 2024. This makes the stock an attractive pick for yield-seeking investors.
Unum Group also has an impressive Value Score of A. The insurer currently has a trailing 12-month P/B ratio of 0.92, lower than the industry range of 1.56.
Other Stocks to Consider
Some other top-ranked stocks from the insurance industry are W.R. Berkley Corporation WRB, Berkshire Hathaway (BRK.B) and American Financial Group, Inc. AFG. While W.R. Berkley sports a Zacks Rank #1, Berkshire Hathaway and American Financial carry a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
The bottom line of W.R. Berkley surpassed earnings estimates in each of the last four quarters, the average beat being 25.63%. In the past year, the insurer has gained 31.5%.
The Zacks Consensus Estimate for W.R. Berkley’s 2022 and 2023 earnings has moved 5.1% and 2.4% north, respectively, in the past 30 days.
Berkshire Hathaway delivered a four-quarter average earnings surprise of 22.18%. In the past year, Berkshire Hathaway has gained 10%.
The Zacks Consensus Estimate for BRK.B’s 2022 and 2023 earnings implies a respective increase of 15% and 6.2% from the year-ago reported number.
American Financial’s earnings surpassed estimates in each of the last four quarters, the average beat being 28.16%. In the past year, American Financial has lost 2.2%.
The Zacks Consensus Estimate for AFG’s 2022 and 2023 earnings has moved 0.6% and 1.8% north, respectively, in the past seven days.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
W.R. Berkley Corporation (WRB) : Free Stock Analysis Report
Berkshire Hathaway Inc. (BRK.B) : Free Stock Analysis Report
Unum Group (UNM) : Free Stock Analysis Report
American Financial Group, Inc. (AFG) : Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research
