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Why Is Sun Life (SLF) Up 4.9% Since Last Earnings Report?
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It has been about a month since the last earnings report for Sun Life (SLF - Free Report) . Shares have added about 4.9% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Sun Life due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Sun Life’s Q4 Earnings Rise Y/Y on Business Growth
Sun Life Financial Inc. delivered fourth-quarter 2020 underlying net income of $661 million (C$862 million), up 10.2% year over year. This improvement was fueled by strong performances across SLF U.S. and SLF Asset Management segments.
Insurance sales increased 2.9% year over year to $1093 million (C$1.4 billion). Wealth sales increased 16.5% year over year to $39.6 billion (C$51.6 billion) in the quarter under review.
Premiums and deposits were $46.3 billion (C$60.3 billion), up 19% year over year. Net premiums increased 4.1% year over year to $5.1 billion (C$6.6 billion).
Segment Results
SLF Canada’s underlying net income declined 7% year over year to $186 million (C$243 million), reflecting investing activity losses due to asset repositioning in the current quarter, unfavorable expense and mortality experience, partially offset by improved morbidity experience and business growth. Unfavorable expense experience was largely driven by continued investments in digital and Group Benefits (GB) operations.
SLF U.S.’ underlying net income was $148 million, up 8% from the prior-year quarter driven by favorable morbidity experience in medical stop-loss, higher net investment returns on surplus and business growth, partially offset by less favorable credit experience and unfavorable expense experience.
SLF Asset Management’s underlying net income of $333 million increased 19% year over year, driven by higher average net assets (ANA) in MFS and higher results due to the BGO and InfraRed acquisitions.
SLF Asia reported underlying net income of $89 million (C$116 million), which declined 17.8% year over year reflecting an AFS impairment of $20 million related to an investment in a fund managed by its joint venture in India and less favorable credit experience, partially offset by a favorable expense experience and higher new business gain in International Hubs.
Financial Update
Global assets under management were $956.5 billion (C$1246.6 billion), up 14.8% year over year. Sun Life Assurance’s Minimum Continuing Capital and Surplus Requirements (LICAT) ratio was 127% as of Dec 31, 2020, having contracted 300 bps from the level as of Dec 31, 2019. The LICAT ratio for Sun Life (including cash and other liquid assets) was 147%, up 400 bps from the level on Dec 31, 2019. Sun Life’s return on equity of 13.3% in the fourth quarter contracted 30 basis points year over year. Underlying ROE of 15.4% grew 40 basis points year over year. Leverage ratio of 23.5% at fourth-quarter end expanded 230 basis points year over year.
Dividend Update
On Feb 10, 2021, the company’s board of directors approved a dividend of 55 cents per share for first-quarter 2021. The amount will be paid out on Mar 31, 2021 to shareholders of record at the close of business on Mar 1, 2021.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates review. The consensus estimate has shifted 15.91% due to these changes.
VGM Scores
Currently, Sun Life has an average Growth Score of C, though it is lagging a bit on the Momentum Score front with a D. However, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of this revision looks promising. It comes with little surprise Sun Life has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
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Why Is Sun Life (SLF) Up 4.9% Since Last Earnings Report?
It has been about a month since the last earnings report for Sun Life (SLF - Free Report) . Shares have added about 4.9% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Sun Life due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Sun Life’s Q4 Earnings Rise Y/Y on Business Growth
Sun Life Financial Inc. delivered fourth-quarter 2020 underlying net income of $661 million (C$862 million), up 10.2% year over year. This improvement was fueled by strong performances across SLF U.S. and SLF Asset Management segments.
Insurance sales increased 2.9% year over year to $1093 million (C$1.4 billion). Wealth sales increased 16.5% year over year to $39.6 billion (C$51.6 billion) in the quarter under review.
Premiums and deposits were $46.3 billion (C$60.3 billion), up 19% year over year. Net premiums increased 4.1% year over year to $5.1 billion (C$6.6 billion).
Segment Results
SLF Canada’s underlying net income declined 7% year over year to $186 million (C$243 million), reflecting investing activity losses due to asset repositioning in the current quarter, unfavorable expense and mortality experience, partially offset by improved morbidity experience and business growth. Unfavorable expense experience was largely driven by continued investments in digital and Group Benefits (GB) operations.
SLF U.S.’ underlying net income was $148 million, up 8% from the prior-year quarter driven by favorable morbidity experience in medical stop-loss, higher net investment returns on surplus and business growth, partially offset by less favorable credit experience and unfavorable expense experience.
SLF Asset Management’s underlying net income of $333 million increased 19% year over year, driven by higher average net assets (ANA) in MFS and higher results due to the BGO and InfraRed acquisitions.
SLF Asia reported underlying net income of $89 million (C$116 million), which declined 17.8% year over year reflecting an AFS impairment of $20 million related to an investment in a fund managed by its joint venture in India and less favorable credit experience, partially offset by a favorable expense experience and higher new business gain in International Hubs.
Financial Update
Global assets under management were $956.5 billion (C$1246.6 billion), up 14.8% year over year. Sun Life Assurance’s Minimum Continuing Capital and Surplus Requirements (LICAT) ratio was 127% as of Dec 31, 2020, having contracted 300 bps from the level as of Dec 31, 2019. The LICAT ratio for Sun Life (including cash and other liquid assets) was 147%, up 400 bps from the level on Dec 31, 2019. Sun Life’s return on equity of 13.3% in the fourth quarter contracted 30 basis points year over year. Underlying ROE of 15.4% grew 40 basis points year over year. Leverage ratio of 23.5% at fourth-quarter end expanded 230 basis points year over year.
Dividend Update
On Feb 10, 2021, the company’s board of directors approved a dividend of 55 cents per share for first-quarter 2021. The amount will be paid out on Mar 31, 2021 to shareholders of record at the close of business on Mar 1, 2021.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates review. The consensus estimate has shifted 15.91% due to these changes.
VGM Scores
Currently, Sun Life has an average Growth Score of C, though it is lagging a bit on the Momentum Score front with a D. However, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of this revision looks promising. It comes with little surprise Sun Life has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.