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StanCorp Financial: A Strong Buy

Zacks Equity Research

On Jul 5, Zacks Investment Research upgraded StanCorp Financial Group Inc. (SFG) to a Zacks Rank #1 (Strong Buy).

Why the Upgrade?

StanCorp Financial delivered positive earnings surprises in the last 4 quarters with an average beat of 21.1%. The long-term earnings growth of the company is presently pegged at 7%.

The company continues to work on pricing actions to mitigate the higher group long-term disability claims incidence and a continued low interest rate environment.

StanCorp’s investment portfolio continues to perform well with no considerable exposure to high-risk asset classes.

StanCorp enjoys a strong capital position, enabling it to remain focused on enhancing shareholder value. StanCorp envisions buybacks between $40 million and $80 million in 2013.  Additionally, its dividend yield stands at 1.82%, well above the industry average of 1.51%.

The last reported quarter benefited from lower operating expenses and management expects it to decline through 2013.

We expect the life insurer to surpass expectations when it reports its second-quarter results on Jul 23.  This is because it has a right combination of a positive Earnings ESP (Read: Zacks Earnings ESP: A Better Method) and Zacks Rank #1 (Strong Buy). ESP or Expected Surprise Prediction, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, is at +2.0%.

Additionally, for the second quarter, the Zacks Consensus Estimate is pegged at $1.00 per share, up 96.6% year over year. The Zacks Consensus Estimate for 2013 increased 1% to $3.97 per share over the last 60 days, reflecting a year-over-year increase of 22.6%. The same for 2014 is pegged at $4.30, increasing 0.7% over the same time frame and translating to a year-over-year improvement of 8.3%.

Other Stocks to Consider

Apart from StanCorp Financial, Symetra Financial Corporation (SYA) with a Zacks Rank #1 (Strong Buy), China Life Insurance Co. Ltd. (LFC) and Ameriprise Financial Inc. (AMP), both with Zacks Rank #2 (Buy) are also worth considering.

Read the Full Research Report on SFG

Read the Full Research Report on AMP

Read the Full Research Report on LFC

Read the Full Research Report on SYA

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