Sun Life (SLF) Down 3% Since Last Earnings Report: Can It Rebound?
It has been about a month since the last earnings report for Sun Life (SLF). Shares have lost about 3% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Sun Life due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Sun Life Q2 Earnings Match Estimates, Decrease Y/Y
Sun Life Financial Inc. delivered a second-quarter 2023 underlying net income of $1.17 per share, which matched the Zacks Consensus Estimate. The bottom line decreased 1.7% year over year.
The underlying net income was reported at $684.87 million (C$920 million).
Wealth sales decreased 41.3% year over year to $31.55 billion (C$42.39 billion) in the quarter under review. New business contractual service margin was $200 million (C$270 million).
Segment Results
SLF Canada’s underlying net income was $276.9 million (C$372 million). Canada witnessed higher net investment income, driven by higher volume and yields, and improved insurance experience, offset by higher expenses.
SLF U.S.’ underlying net income was $160 million (C$215 million). The business witnessed solid performance across all businesses, contribution from the DentaQuest acquisition and favorable group disability.
SLF Asset Management reported an underlying net income of $220 million (C$296 million). Asset Management witnessed higher net investment income and impacts from foreign exchange translation and higher fee-related earnings.
SLF Asia reported an underlying net income of $111 million (C$150 million). Asia witnessed higher premiums, reflecting good sales momentum, offset by less favorable morbidity experience in Hong Kong.
Financial Update
Global assets under management were $1,030.89 billion (C$1,367 billion), up 5.3% year over year. Sun Life Assurance’s Minimum Continuing Capital and Surplus Requirements (LICAT) ratio was 139% as of Jun 30, 2023, down 500 basis points from prior-quarter results.
The LICAT ratio for Sun Life (including cash and other liquid assets) was 148%, which remains unchanged from prior quarter results. Sun Life’s return on equity was 12.7% in the second quarter, which contracted 650 basis points year over year. The underlying ROE of 17.7% expanded 100 basis points year over year. The leverage ratio of 23.3% remained unchanged from the prior-quarter results.
Dividend Update
On Aug 8, the company’s board of directors approved a dividend of 75 cents per share. The amount will be paid out on Sep 29, 2023, to shareholders of record at the close of business on Aug 30.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates review.
VGM Scores
At this time, Sun Life has a subpar Growth Score of D, a grade with the same score on the momentum front. However, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Sun Life has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
Sun Life is part of the Zacks Insurance - Life Insurance industry. Over the past month, American Equity Investment (AEL), a stock from the same industry, has gained 0.7%. The company reported its results for the quarter ended June 2023 more than a month ago.
American Equity reported revenues of $542.69 million in the last reported quarter, representing a year-over-year change of -8.4%. EPS of $1.62 for the same period compares with $0.98 a year ago.
American Equity is expected to post earnings of $1.68 per share for the current quarter, representing a year-over-year change of +69.7%. Over the last 30 days, the Zacks Consensus Estimate has changed +0.8%.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for American Equity. Also, the stock has a VGM Score of A.
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Sun Life Financial Inc. (SLF) : Free Stock Analysis Report
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