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Reasons Why Investors Should Hold Sun Life Financial Stock

Zacks Equity Research

Sun Life Financial SLF is well-poised for long-term growth on the back of strategic acquisitions, expanding global asset management business and efficient capital deployment.

Sun Life’s return on equity was 13.2% in the trailing 12-month period, higher than the industry average of 12.96%. Return on equity is a profitability measure that identifies a company’s efficiency in utilizing its shareholders’ funds.

Sun Life boasts the second-largest dental network in the United States on the back of strategic buyouts. The acquisitions have expanded its business in Vietnam, Indonesia, India and Hong Kong. In November 2019, the company acquired a majority stake in BentallGreenOak.

Sun Life remains focused on growth of its Global Asset Management Business, which currently has $1 trillion assets under management. To strengthen its Asset Management Business, the company invests in pension plans and other institutional investors.

Banking on solid capital position and operational excellence, this Zacks Rank #3 (Hold) life insurer deploys capital effectively via dividends and share repurchases to enhance shareholder value. Its dividend yield of 3.7% betters the industry average of 1.8%. The company targets dividend payout ratio in the range of 40-50%.

However, escalating expenses and earnings pressure due to volatility in equity markets and interest rates create pressure on earnings of the company.

The Zacks Consensus Estimate for 2020 earnings per share is pegged at $4.09, indicating increase of nearly 9.5% from the year-ago reported figure.

Shares of Sun Life Financial have rallied 36.1% year to date, outperforming the industry’s increase of 28.2%.

Stocks to Consider

Some better-ranked stocks from the same space are Donegal Group Incorporation DGICA, American Equity Investment Life Holding Company AEL and Primerica Incorporation PRI. While Donegal Group and American Equity Investment sport a Zacks Rank #1 (Strong Buy), Primerica carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Donegal Group provides personal and commercial lines of property and casualty insurance to businesses and individuals in the Mid-Atlantic, Midwestern, New England, and southern states. The company beat estimates in the trailing four quarters by 248.34% on average.

American Equity Investment Life Holding Company provides life insurance products and services in the United States. The company beat estimates in the trailing four quarters by 47.63% on average.

Primerica provides financial products to middle-income households in the United States and Canada.  The company beat estimates in the trailing four quarters by 4.10% on average.

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Primerica, Inc. (PRI) : Free Stock Analysis Report
 
Sun Life Financial Inc. (SLF) : Free Stock Analysis Report
 
American Equity Investment Life Holding Company (AEL) : Free Stock Analysis Report
 
Donegal Group, Inc. (DGICA) : Free Stock Analysis Report
 
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