Back to top

Analyst Blog

This page is temporarily not available.  Please check later as it should be available shortly. If you have any questions, please email customer support at support@zacks.com or call 800-767-3771 ext.  9339.

We are reiterating our Neutral recommendation on Sun Life Financial Inc. (SLF - Analyst Report) following the first quarter earnings release. Sun Life’s Financial Inc. announced first-quarter 2013 net operating earnings $444 million (C$448 million) , improving 2.5% over first quarter 2012. Sun Life retains a Zacks Rank #3 (Hold).
 
Why reiterate?
 
Sun Life is a leading Canadian life insurance company, with an active presence in the U.S. Over the long term we believe the company will be able to generate superior returns for its investors given a proactive approach to managing and mitigating fundamental issues. 
 
Sun Life is seeking to grow internationally. It is specifically focusing on the emerging economies of Asia, which is expected to provide higher return and growth compared to the North American markets.
 
The company is also making business mix changes in its U.S. segment to reduce the equity market exposure and limit its interest rate exposure. 
 
At the same time, Sun Life is aggressively seeking to grow its Global Asset Management Business, which has been witnessing growing asset base for the past many quarters. This business provides higher ROE, lower capital, and lower volatility. It has the potential to provide earnings upside.
 
Along with doing away with high equity/interest rate risk products, Sun Life has implemented hedging to reduce earnings and capital sensitivity to interest rates and equity markets. The company stands better than its peers in terms of managing hedging these risks.
 
Nevertheless, these positives are dwarfed by the historically low interest rate environment that is expected to continue to have a significant negative impact on the company’s operations.  The company’s leverage ratio has also increased due to requirement for additional regulatory capital. 
 
Following the first quarter results, the Zacks Consensus estimate for 2013 moved up by 2.9% to $2.67 as 2 of 3 estimates moved north in the last 30 days. For 2014, 2 of 3 estimates were raised pushing the Zacks Consensus estimate by 1.5% to $2.75 over the same time frame.
 
Other Stocks 
 
Other life insurers StanCorp Financial group Inc. (SFG - Analyst Report), Protective Life Inc. (PL - Analyst Report) both carrying a Zacks Rank #1 (Strong Buy) and China Life Insurance Co. (LFC - Analyst Report), carrying Zacks Rank #2 (Buy) are worth considering

Please login to Zacks.com or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research

Close

Are you a new Zacks Member or a visitor to Zacks.com?

Top Zacks Features

Learn more

Start for as little as $4.50 per trade.

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Zacks.com. Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
DIXIE GROUP DXYN 15.84 +7.90%
BOFL HOLDING BOFI 85.30 +4.97%
RAMBUS INC RMBS 12.31 +4.41%
VIPSHOP HOLD VIPS 148.73 +4.35%
NETFLIX INC NFLX 345.74 +4.32%