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Reasons Why Investors Should Hold Sun Life Financial (SLF)
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Sun Life Financial (SLF - Free Report) has been gaining momentum, given its strategic acquisitions, solid Asia and Canada business and prudent capital deployment.
Growth Projections
The Zacks Consensus Estimate for 2022 and 2023 earnings per share is pegged at $5.03 and $5.65, respectively, indicating a year-over-year increase of 4.6% and 12.5%, respectively. The expected long-term earnings growth rate is pegged at 9%.
Earnings Surprise History
Sun Life has a solid track record of beating earnings estimates in five of the last six quarters.
Zacks Rank & Price Performance
Sun Life currently carries a Zacks Rank #3 (Hold). In the past year, the stock has rallied 7%, against the industry’s decrease of 12.1%.
Image Source: Zacks Investment Research
Return on Equity
Sun Life’s return on equity for the trailing 12 months is 13.9%, better than the industry average of 11.4%. This reflects its efficiency in utilizing its shareholders’ funds.
Business Tailwinds
Asia sales are expected to gain from growth in mutual fund sales in India and the Hong Kong pension business.
The Canada business is likely to gain from higher real estate valuations, equity market growth, strong expected profit growth and favorable expense experience. Higher individual participating life insurance sales and higher large case group benefits sales in Sun Life Health should benefit Insurance sales.
Sun Life remains well poised for growth on the back of premier asset management franchises at MFS and SLC Management and leading wealth and insurance market positions in Canada. An established presence in attractive markets in Asia as well as a shift toward more capital-light businesses in the United States should also add to the upside.
Sun Life considers acquisitions a prudent approach to ramp up its growth profile. Strategic buyouts have positioned it as the second-largest dental network in the United States, consolidated its footprint in Vietnam, Indonesia and India, and expanded its wealth business in Hong Kong.
Sun Life executed over 10 strategic transactions in 2021, including the acquisition of Pinnacle Care, the IPO of India Asset Management Joint Venture as well as the DentaQuest acquisition, which is yet to be closed.
Capital Position
The insurer boasts a strong capital position, which enables it to pursue attractive growth opportunities and provides strong returns to shareholders. Its capital position remains strong with Life Insurance Capital Adequacy Test (LICAT) ratios of 145% at SLF and 124% at SLA. Cash at the holding company was increased to $4.7 billion.
Impressive Dividend History
Banking on operational excellence, the life insurer has increased its dividend at an eight-year (2015-2022) CAGR of 4.7%. Sun Life targets an underlying dividend payout ratio between 40% and 50%, based on underlying earnings per share.
Stocks to Consider
Some better-ranked stocks from the insurance sector are Fidelity National Financial, Inc. (FNF - Free Report) , United Fire Group, Inc. (UFCS - Free Report) and Manulife Financial Corp. (MFC - Free Report) . While Fidelity National and United Fire Group sport a Zacks Rank #1 (Strong Buy), Manulife Financial carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The bottom line of Fidelity National surpassed earnings estimates in each of the last four quarters, the average being 31.73%. In the past year, the insurer has declined 4%.
The Zacks Consensus Estimate for Fidelity National’s 2022 earnings has moved 3.3% north in the past 30 days.
United Fire’s earnings surpassed estimates in each of the last four quarters, the average earnings surprise being 275.45%. In the past year, UFCS stock has rallied 13.5%.
The Zacks Consensus Estimate for UFCS’ 2022 and 2023 earnings has moved 122.2% and 76.9% north, respectively, in the past 60 days.
Manulife Financial’s earnings surpassed estimates in three of the last four quarters, the average beat being 3.39%. In the past year, Manulife Financial has declined 2%.
The Zacks Consensus Estimate for MFC’s 2022 and 2023 earnings has moved 0.4% and 0.7% north, respectively, in the past 60 days.
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Reasons Why Investors Should Hold Sun Life Financial (SLF)
Sun Life Financial (SLF - Free Report) has been gaining momentum, given its strategic acquisitions, solid Asia and Canada business and prudent capital deployment.
Growth Projections
The Zacks Consensus Estimate for 2022 and 2023 earnings per share is pegged at $5.03 and $5.65, respectively, indicating a year-over-year increase of 4.6% and 12.5%, respectively. The expected long-term earnings growth rate is pegged at 9%.
Earnings Surprise History
Sun Life has a solid track record of beating earnings estimates in five of the last six quarters.
Zacks Rank & Price Performance
Sun Life currently carries a Zacks Rank #3 (Hold). In the past year, the stock has rallied 7%, against the industry’s decrease of 12.1%.
Image Source: Zacks Investment Research
Return on Equity
Sun Life’s return on equity for the trailing 12 months is 13.9%, better than the industry average of 11.4%. This reflects its efficiency in utilizing its shareholders’ funds.
Business Tailwinds
Asia sales are expected to gain from growth in mutual fund sales in India and the Hong Kong pension business.
The Canada business is likely to gain from higher real estate valuations, equity market growth, strong expected profit growth and favorable expense experience. Higher individual participating life insurance sales and higher large case group benefits sales in Sun Life Health should benefit Insurance sales.
Sun Life remains well poised for growth on the back of premier asset management franchises at MFS and SLC Management and leading wealth and insurance market positions in Canada. An established presence in attractive markets in Asia as well as a shift toward more capital-light businesses in the United States should also add to the upside.
Sun Life considers acquisitions a prudent approach to ramp up its growth profile. Strategic buyouts have positioned it as the second-largest dental network in the United States, consolidated its footprint in Vietnam, Indonesia and India, and expanded its wealth business in Hong Kong.
Sun Life executed over 10 strategic transactions in 2021, including the acquisition of Pinnacle Care, the IPO of India Asset Management Joint Venture as well as the DentaQuest acquisition, which is yet to be closed.
Capital Position
The insurer boasts a strong capital position, which enables it to pursue attractive growth opportunities and provides strong returns to shareholders. Its capital position remains strong with Life Insurance Capital Adequacy Test (LICAT) ratios of 145% at SLF and 124% at SLA. Cash at the holding company was increased to $4.7 billion.
Impressive Dividend History
Banking on operational excellence, the life insurer has increased its dividend at an eight-year (2015-2022) CAGR of 4.7%. Sun Life targets an underlying dividend payout ratio between 40% and 50%, based on underlying earnings per share.
Stocks to Consider
Some better-ranked stocks from the insurance sector are Fidelity National Financial, Inc. (FNF - Free Report) , United Fire Group, Inc. (UFCS - Free Report) and Manulife Financial Corp. (MFC - Free Report) . While Fidelity National and United Fire Group sport a Zacks Rank #1 (Strong Buy), Manulife Financial carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The bottom line of Fidelity National surpassed earnings estimates in each of the last four quarters, the average being 31.73%. In the past year, the insurer has declined 4%.
The Zacks Consensus Estimate for Fidelity National’s 2022 earnings has moved 3.3% north in the past 30 days.
United Fire’s earnings surpassed estimates in each of the last four quarters, the average earnings surprise being 275.45%. In the past year, UFCS stock has rallied 13.5%.
The Zacks Consensus Estimate for UFCS’ 2022 and 2023 earnings has moved 122.2% and 76.9% north, respectively, in the past 60 days.
Manulife Financial’s earnings surpassed estimates in three of the last four quarters, the average beat being 3.39%. In the past year, Manulife Financial has declined 2%.
The Zacks Consensus Estimate for MFC’s 2022 and 2023 earnings has moved 0.4% and 0.7% north, respectively, in the past 60 days.