Reasons Why Investors Should Retain Unum Group (UNM) Now
Unum Group UNM is well-poised to gain from favorable growth estimates, strong persistency in group lines and the improvement of new product lines, increased premium income, prudent capital deployment and a solid capital position.
Optimistic Growth Projections
The Zacks Consensus Estimate for Unum Group’s 2023 earnings is pegged at $7.74 per share, indicating a 24.6% increase from the year-ago reported figure on 3.1% higher revenues of $12.38 billion. The consensus estimate for 2024 earnings is pegged at $7.94 per share, indicating a 2.5% increase from the year-ago reported figure on 3.4% higher revenues of $12.80 billion.
The expected long-term earnings growth rate is 6.9%, which is higher than the industry average of 6.7%.
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 5.62%.
Zacks Rank & Price Performance
UNM currently carries a Zacks Rank #3 (Hold). Over the past year, the stock has gained 4.4% compared with the industry’s rise of 8.9%.
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Style Score
UNM has a favorable VGM Score of B. VGM Score helps identify stocks with the most attractive value, best growth and most promising momentum.
Return on Equity (ROE)
In the third quarter of 2023, Unum Group’s trailing 12-month ROE expanded 410 basis points to 15.5%. ROE reflects the insurer’s efficiency in using shareholders’ funds.
Business Tailwinds
Solid operational performance, favorable benefits experience, as well as strong top-line improvement 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.
In 2023, Unum Group expect sales growth in the range of 8-12% and premium growth in the range of 3-5% from core business. UNM estimates 2023 bottom line to grow 20-25%. The insurer also estimates 45-55% growth in adjusted operating EPS by 2024. It expects after-tax adjusted operating income per share to increase 20-25% for 2023.
Unum U.S. continues to benefit from disciplined sales trends, strong persistency in group lines and the growth of new product lines like dental and vision, which improve premium income.
The Colonial Life segment of the insurer should gain from improved premium income and favorable risk results, lower operating expenses and favorable benefits. In 2023, the company expects positive adjusted operating income growth with sales growth. Healthy agent recruiting and productive small case sales are likely to benefit sales.
The insurer boasts a solid capital position. Sustained solid operating results have been driving a solid level of statutory earnings and capital, cushioning financial flexibility. As of Sep 30, 2023, the weighted average risk-based capital ratio for the company’s traditional U.S. insurance companies was approximately 470% and holding company liquidity remains robust at $1.2 billion. Over the long term, it expects risk-based capital ratio of more than 350% and by the end of 2023, the ratio is expected to be 400%.
Unum Group has consistently enhanced shareholders’ value through dividend hikes and share buybacks. As of Sep 30, 2023, the remaining repurchase amount under the current share repurchase program was $75.9 million.
Stocks to Consider
Some better-ranked stocks from the insurance industry are Aflac Incorporated AFL, Employers Holdings Inc. EIG and Kinsale Capital Group, Inc. KNSL, each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Aflac beat estimates in each of the last four quarters, the average being 14.5%. In the past year, the insurer has gained 14.5%.
The Zacks Consensus Estimate for AFL’s 2023 and 2024 earnings per share indicates a year-over-year increase of 18.2% and 0.5%, respectively.
Employers Holdings beat estimates in each of the last four quarters, the average being 26.5%. In the past year, the insurer has lost 16.3%.
The Zacks Consensus Estimate for EIG’s 2023 and 2024 earnings per share indicates a year-over-year increase of 17.7% and 1.4%, respectively.
Kinsale Capital has a solid track record of beating earnings estimates in each of the last four quarters, the average being 14.25%. In the past year, the insurer has 19.2%.
The Zacks Consensus Estimate for KNSL’s 2023 and 2024 earnings has moved 2.7% and 1.7% north, respectively, in the past 30 days, reflecting analysts’ optimism.
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Aflac Incorporated (AFL) : Free Stock Analysis Report
Unum Group (UNM) : Free Stock Analysis Report
Employers Holdings Inc (EIG) : Free Stock Analysis Report
Kinsale Capital Group, Inc. (KNSL) : Free Stock Analysis Report
