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Why You Must Retain Unum Group (UNM) in Your Portfolio
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Shares of Unum Group (UNM - Free Report) gained 35.43% over last year, significantly outperforming the Zacks categorized Accident & Health Insurance industry’s growth of 18.45%. The stock is expected to retain this momentum on the back of a few positives.
Unum Group is currently an industry-leading disability income writer as well as the second-largest writer of voluntary business in the U.S. Despite the country’s volatile economy, the company managed to deliver favorable operating results across majority of its insurance entities in the past few years.
Also, the company’s operating earnings have been displaying substantial improvement in last few years, and the first quarter of 2017 was no exception. Unum Group also anticipates 2017 operating income per share to rise between 3-6%. This apart, the company’s conservative pricing and reservation practices have contributed to profitability over a considerable period of time.
Unum U.S. and Colonial Life, two of the largest operating segments of Unum Group, have been witnessing operating income growth over the past few years. This has been primarily supported by improving premium income and favorable risk results. Therefore, Unum Group awaits better performance from these segments in the near term to add to the company’s bottom line.
Notably, the company expects sales growth at Colonial Life to continue in 2017 and beyond. Further, management remains committed toward shifting to a mix of businesses, which will result in higher growth and stable margins.
This apart, Unum Group has been displaying solid capital generation and strong financial flexibility. This has been enabling the company to undertake effective capital deployment activities. While the board of directors in May 2017 approved a quarterly dividend hike of 15%, marking the ninth consecutive year of dividend hike, the company has a $750 million share buyback program under its authorization.
The company, however, has been witnessing weak performances at its Closed Block and Corporate segments over an extended period of time. Hence, it is not confident of better results at these two segments in near term.
Nonetheless, valuation is attractive at present as the stock is currently trading at a price to book multiple of 1.17, an 8.6% discount to the industry average of 1.28. Also, the company carries a VGM Score of B. Here V stands for Value, G for Growth and M for Momentum and the score is a weighted combination of these three metrics.
Some better-ranked stocks from the insurance industry include CNA Financial Corp. (CNA - Free Report) , American Financial Group, Inc. (AFG - Free Report) and First American Financial Corp. (FAF - Free Report) . Each stock holds a Zacks Rank #2 (Buy).
CNA Financial offers commercial P&C insurance products, primarily in the United States. The company delivered positive surprises in three of the last four quarters with an average beat of 12.45%.
American Financial provides property and casualty insurance products in the United States. The company delivered positive surprises in three of last four quarters with average beat of 11.47%.
First American Financial offers financial services. The company delivered positive surprises in all last four quarters with average beat of 14.12%.
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
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Why You Must Retain Unum Group (UNM) in Your Portfolio
Shares of Unum Group (UNM - Free Report) gained 35.43% over last year, significantly outperforming the Zacks categorized Accident & Health Insurance industry’s growth of 18.45%. The stock is expected to retain this momentum on the back of a few positives.
Unum Group is currently an industry-leading disability income writer as well as the second-largest writer of voluntary business in the U.S. Despite the country’s volatile economy, the company managed to deliver favorable operating results across majority of its insurance entities in the past few years.
Also, the company’s operating earnings have been displaying substantial improvement in last few years, and the first quarter of 2017 was no exception. Unum Group also anticipates 2017 operating income per share to rise between 3-6%. This apart, the company’s conservative pricing and reservation practices have contributed to profitability over a considerable period of time.
Unum U.S. and Colonial Life, two of the largest operating segments of Unum Group, have been witnessing operating income growth over the past few years. This has been primarily supported by improving premium income and favorable risk results. Therefore, Unum Group awaits better performance from these segments in the near term to add to the company’s bottom line.
Notably, the company expects sales growth at Colonial Life to continue in 2017 and beyond. Further, management remains committed toward shifting to a mix of businesses, which will result in higher growth and stable margins.
This apart, Unum Group has been displaying solid capital generation and strong financial flexibility. This has been enabling the company to undertake effective capital deployment activities. While the board of directors in May 2017 approved a quarterly dividend hike of 15%, marking the ninth consecutive year of dividend hike, the company has a $750 million share buyback program under its authorization.
The company, however, has been witnessing weak performances at its Closed Block and Corporate segments over an extended period of time. Hence, it is not confident of better results at these two segments in near term.
Nonetheless, valuation is attractive at present as the stock is currently trading at a price to book multiple of 1.17, an 8.6% discount to the industry average of 1.28. Also, the company carries a VGM Score of B. Here V stands for Value, G for Growth and M for Momentum and the score is a weighted combination of these three metrics.
Zacks Rank
Currently, Unum Group carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Stocks to Consider
Some better-ranked stocks from the insurance industry include CNA Financial Corp. (CNA - Free Report) , American Financial Group, Inc. (AFG - Free Report) and First American Financial Corp. (FAF - Free Report) . Each stock holds a Zacks Rank #2 (Buy).
CNA Financial offers commercial P&C insurance products, primarily in the United States. The company delivered positive surprises in three of the last four quarters with an average beat of 12.45%.
American Financial provides property and casualty insurance products in the United States. The company delivered positive surprises in three of last four quarters with average beat of 11.47%.
First American Financial offers financial services. The company delivered positive surprises in all last four quarters with average beat of 14.12%.
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2020. Click here for the 6 trades >>