Reasons Why Investors Should Retain Sun Life (SLF) Stock Now
Sun Life Financial Inc. SLF has been favored by investors on the back of business improvement, higher Asia sales, growing presence in the markets in Asia, stronger new business gains, effective capital deployment and a solid capital position.
Earnings Surprise History
Sun Life has a decent track record of beating the Zacks Consensus Estimate for earnings in five of the last six quarters, while matching once.
Zacks Rank & Price Performance
SLF currently caries a Zacks Rank #3 (Hold). In the past year, the stock has gained 15.4%, outperforming the industry’s growth of 9%.
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Optimistic Growth Projections
The Zacks Consensus Estimate for the company’s 2024 earnings is pegged at $5.07 per share, suggesting growth of 8% year over year. The expected long-term earnings growth rate is pegged at 8%.
Return on Equity (ROE)
Sun Life’s ROE for the trailing 12 months is 15.1%, up 150 basis points year over year. This reflects its efficiency in utilizing shareholders’ funds.
Business Tailwinds
Sun Life remains well-poised for growth, riding on premier asset management franchises at MFS and SLC Management as well as leading wealth and insurance market positions in Canada. Also, the shift toward more capital-light businesses in the United States as well as an established presence in attractive markets in Asia should benefit the insurer in the long run.
Asia sales are expected to gain from growth in mutual fund sales in India, money market sales in the Philippines and the Hong Kong pension business.
The Canada business is likely to improve from business growth, higher new business gains and experience-related items. Higher individual participating life insurance sales and improved large case group benefits sales in Sun Life Health should benefit Insurance sales.
Sun Life Financial collaborated with Independence Blue Cross in July 2023 to become the exclusive provider of stop loss insurance for its customers. Self-funded employers, who are at risk of higher-than-expected health claims, will benefit from this partnership. This move bodes well for SLF as diversifying its revenue base will help it navigate ongoing inflationary headwinds. This collaboration is expected to aid the health and benefits of the U.S. segment.
Improving margins in the stop loss business arising from dropping loss ratios should continue to aid bottom-line results in the future.
Sun Life Investment Management fosters its investment capabilities in private fixed income, mortgages and real estate by investing in pension plans and other institutional investors. This development further strengthens the company’s Asset Management pillar, which provides a higher ROE, lower capital and volatility and has the potential for an earnings upside.
The company’s capital position remains strong, with Sun Life Assurance’s Minimum Continuing Capital and Surplus Requirements ratio of 148% at the second-quarter end. Its capital and cash positions remain healthy, along with a low leverage ratio provide flexibility and opportunity for further capital deployment. Sun Life targets minimum cash and other liquid assets at the holding company to be $2 billion.
Backed by a solid operational excellence, the insurer hikes dividend to reinforce the commitment to provide strong returns to shareholders. The life insurer also repurchases shares, reflecting its strong cash and capital generation in its businesses. SLF remains focused on improving ROE and the retention of flexibility for future growth opportunities.
Stocks to Consider
Some better-ranked stocks from the life insurance industry are NN Group NV Unsponsored ADR NNGRY, GoHealth, Inc. GOCO and Primerica, Inc. PRI. While NN Group NV sports a Zacks Rank #1 (Strong Buy), GoHealth and Primerica carry a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for NN Group NV’s 2023 and 2024 earnings per share is pegged at $2.73 and $3.90, indicating an increase of 268.92% and 42.86% year over year, respectively. In the past year, NNGRY has lost 19.5%.
The Zacks Consensus Estimate for NNGRY’s 2023 and 2024 earnings has moved 50% and 40% north, respectively, in the past seven days, reflecting analysts’ optimism on the stock.
The Zacks Consensus Estimate for GoHealth’s 2023 and 2024 earnings per share indicates an increase of 75.6% and 33.8% year over year, respectively. In the past year, GOCO has rallied 135.6%.
The Zacks Consensus Estimate for GoHealth’s 2023 and 2024 revenues is pegged at $820.76 million and $892.27 million, indicating an increase of 29.9% and 8.7% year over year, respectively.
Primerica has a solid track record of beating earnings estimates in each of the last four quarters, the average being 6.46%. In the past year, PRI has gained 47.2%.
The Zacks Consensus Estimate for PRI’s 2023 and 2024 earnings per share is pegged at $15.63 and $17.37, indicating an increase of 36.6% and 11.1% year over year, respectively.
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Primerica, Inc. (PRI) : Free Stock Analysis Report
Sun Life Financial Inc. (SLF) : Free Stock Analysis Report
NN Group NV Unsponsored ADR (NNGRY) : Free Stock Analysis Report
GoHealth, Inc. (GOCO) : Free Stock Analysis Report
