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Can Unum U.S.' Strength Drive Unum Group (UNM) Q3 Earnings?

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Unum Group UNM will report third-quarter 2018 results after the market closes on Oct 24. Last reported quarter, the company delivered a positive earnings surprise of 2.36%.

Let’s see, how things are shaping up for this announcement.

On the back of a compelling product portfolio and a solid execution, better-than-expected premiums, favorable persistency as well as benefit ratio trends across the company’s major business lines, Unum U.S. has likely delivered strong results in the third quarter.

Moreover, Colonial Life has likely displayed a solid performance in the soon-to-be-reported quarter owing to better-than-expected premium growth as well as a possible increase in operating income.

Strategic investments made to ramp up growth in core business is already showing results. To that end, the acquisition of dental businesses in the United States and the U.K. is expected to have continued to drive results in the third quarter.  

The company’s core businesses might have experienced more than decent sales volume and premium growth while maintaining strong margins in the third quarter.

The company is estimated to witness bottom-line growth in the yet-to-be-reported quarter, driven by consistent favorable operating trends, a strong premium rise across the core business lines plus share buybacks. Lower tax rate has also contributed to this probable upside. The Zacks Consensus Estimate for the metric is pegged at $1.28, up 17.4% year over year.

Riding on improving interest rates, the company might have experienced better investment results in the yet-to-be-reported quarter. The Consensus Estimate for the metric stands at $609 million, unchanged from the prior-year quarter’s figure.

However, volatility in Unum U.K. might have persisted due to the challenging and uncertain environment, which has possibly induced lower operating income. Also, the company has likely witnessed a weak performance at its Closed Block and Corporate segments with lower-than-expected operating revenues.

What Our Quantitative Model States

Our proven model does not conclusively show that Unum Group is likely to beat on earnings this to-be-reported period. This is because a stock needs to have both a positive Earnings ESP and a favorable Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. But that is not the case here as you will see below.

Earnings ESP: Unum Group has an Earnings ESP of -0.26%. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.  

Unum Group Price and EPS Surprise


Unum Group Price and EPS Surprise | Unum Group Quote

Zacks Rank: Unum Group carries a Zacks Rank #2, which increases the predictive power of ESP. However, the company needs to have a positive ESP to be confident about an earnings surprise. Therefore, this combination leaves surprise prediction inconclusive.

We caution against the Sell-rated stocks (#4 or 5) going into an earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks to Consider

Some stocks worth considering from the insurance industry with the right combination of elements to surpass estimates this time around are as follows:

Everest Re Group, Ltd. RE is set to report third-quarter earnings on Oct 29 and has an Earnings ESP of +10.43%. The company is a Zacks #3 Ranked player. You can see the complete list of today’s Zacks #1 Rank stocks here.

Lincoln National Corporation LNC has an Earnings ESP of +0.26% and is a #2 Ranked player. The company is set to announce third-quarter earnings on Nov 1.  

Willis Towers Watson Public Limited Company WLTW has an Earnings ESP of +2.40% and a Zacks Rank of 3. The company is set to release third-quarter earnings on Nov 2.

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