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We expect accident and health insurer Unum Group (UNM - Analyst Report) to beat expectations when it reports second-quarter 2014 results on Jul 30.

Why a Likely Positive Surprise?

Our proven model shows that Unum Group is likely to beat earnings because it has the right combination of two key ingredients.

Zacks ESP: Earnings ESP, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, is +1.15%. This is a meaningful and a leading indicator of a likely positive earnings surprise.

Zacks Rank: Unum Group has a Zacks Rank #3 (Hold). Note that stocks with a Zacks Rank #1, 2 and 3 have a significantly higher chance of beating earnings. The Sell-rated stocks (#4 and 5) should never be considered going into an earnings announcement.  

The combination of Unum Group’ s Zacks Rank #3 and +1.15% ESP makes us confident of an earnings beat this release.

What is Driving the Better-than-Expected Earnings?

The second-quarter results are expected to be favorably impacted by disciplined underwriting, pricing, underwriting and reservation practices.

The investment results are expected to be aided by the company’s initiatives undertaken to raise prices in those product areas which are most affected by low rates. The company’s investment strategy serves as an important component of the overall business performance.

Continued share repurchase will also boost the bottom line.

The positive trend is backed by the trailing four-quarter average surprise of 2.43%, much of which was contributed by the 2.7% surprise in the third quarter of 2013. Better performances in core business largely drove the upside.

Management also remains focused on moving to a mix of businesses with higher growth and stable margins resulting in solid operational results.

Other Stocks to Consider

Here are some other companies you may want to consider as our model shows these have the right combination of elements to post an earnings beat this coming quarter:  

Arch Capital Group Ltd. (ACGL - Snapshot Report), Earnings ESP of +5.10% and a Zacks Rank #2 (Buy).

Aflac Inc. (AFL - Analyst Report), Earnings ESP of +0.63% and a Zacks Rank #2.

Protective Life (PL - Analyst Report), Earnings ESP of +0.83% and a Zacks Rank #3.

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