Unum Group UNM is poised for long-term growth on the back of solid segmental performance, market presence and strong capital position. The company has a favorable Growth Score of B. This style score analyzes the growth prospects of a company. The expected long-term earnings growth rate is 9%, better than the industry average of 6%.
Recently, the company reported fourth quarter and full-year 2018 results. Adjusted quarterly operating income per share increased 21.2% year over year, near the high end of its growth guidance of 17% to 23%. Core business continued to perform well with premiums growing decently, sales increasing and benefits experience improving. These, in turn, have been driving healthy margins and strong cash flow generation, aiding financial flexibility.
Shares of this Zacks Rank #3 (Hold) insurer have rallied 28.5% year to date, outperforming the S&P 500 Index’s gain of 11.5%.
Unum U.S. and Colonial Life, two of the largest segments of Unum Group, have been consistently reporting strong results. These segments are likely to continue to perform well on the back of group long-term disability, individual disability as well as dental and vision products. The company is expected to see stable persistency across all its U.S. business lines. Also, it aims to shift to a mix of businesses with higher growth and stable margins.
Unum Group is a leading disability income writer and writer of voluntary business in the United States. This accident and health insurer carries an impressive VGM Score of A. VGM Score helps identify stock with the most attractive value, best growth and most promising momentum.
Unum Group has a strong capital management policy in place. The company has a track record of posting at least 10 straight years of annual dividend growth at a CAGR of 11%. Its dividend yield of 2.8% is better than the industry average of 2.4%. In fact, the company resumed its share buyback activities in the fourth quarter of 2018, and repurchased $350 million shares in the year.
Banking on operational strength, Unum Group projects after-tax operating income growth per share between 4% and 7% for 2019. The Zacks Consensus Estimate for current-year earnings is pegged at $5.50, indicating 5.8% year-over-year increase on 2.7% higher revenues.
Stocks to Consider
Some better-ranked insurers are Aflac Incorporated AFL, RLI Corp. RLI and The Allstate Corporation ALL. Each stock carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.
Aflac provides voluntary supplemental health and life insurance products. It came up with a positive surprise of 8.51% in the last reported quarter.
RLI, an insurance holding company, underwrites property and casualty insurance globally. The company delivered 566.67% positive earnings surprise in the last reported quarter.
Allstate provides property and casualty, as well as other insurance products in the United States and Canada. The company delivered 22.77% positive earnings surprise in the last reported quarter.
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