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Here's Why You Should Hold Sun Life Financial (SLF) Stock
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Sun Life Financial Inc.’s (SLF - Free Report) growth in mutual fund sales, Hong Kong pension business, business growth, higher new business gains, solid capital position, and effective capital deployment makes it worth retaining in one’s portfolio.
Growth Projections
The Zacks Consensus Estimate for 2023 earnings per share is pegged at $4.90, indicating a year-over-year increase of 6.17%. 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
Sun Life currently carries a Zacks Rank #3 (Hold).
Business Tailwinds
Sun Life remains well-poised for growth in 2022, riding on premier asset management franchises at MFS and SLC Management as well as leading wealth and insurance market positions in Canada. Also, the shift toward more capital-light businesses in the United States as well as an established presence in attractive markets in Asia should benefit the insurer in the long run.
Asia sales are expected to gain from growth in mutual fund sales in India, money market sales in the Philippines and the Hong Kong pension business.
The Canada business is likely to gain from business growth, higher new business gains and experience-related items. Higher individual participating life insurance sales and higher large case group benefits sales in Sun Life Health should benefit Insurance sales.
Sun Life considers acquisitions a prudent approach to ramp up its growth profile. In September 2022, SLF agreed to acquire a 51% interest in Advisors Asset Management, Inc. (“AAM”) for $214 million, subject to customary adjustments with a put/call option to acquire the remaining 49% at the beginning of 2028.
The buyout is expected to enable SLF to extend its top-notch alternative investment capabilities to new clients and bolster the list of investment solutions that AAM can offer to the U.S. financial advisor market. The deal will also enable SLC Management as well as its affiliated investment managers to provide their investment strategies to the U.S. HNW market.
The insurer boasts a strong capital position, which remains strong with Life Insurance Capital Adequacy Test (LICAT) ratios of 128% at SLF and 124% at SLA. Cash and other liquid assets at the holding company increased to $4.7 billion. Sun Life targets minimum cash and other liquid assets at the holding company of $500 million.
Sun Life has increased its dividend at an eight-year (2015-2022) CAGR of 4.7%. It currently yields 5.3%, which is better than the industry average of 4.1%. Its dividend payout ratio is targeted within the 40-50% range. SLF remains focused on improving ROE and retaining flexibility for future growth opportunities.
Price Performance
In the past year, the stock has lost 26.5% compared with the industry’s decrease of 22.3%. Its focus on the expansion of its Asia business and global asset management business, favorable business mix, strategic acquisitions and solid capital position should help the stock bounce back.
Image Source: Zacks Investment Research
Stocks to Consider
Some better-ranked stocks from the insurance industry are ProAssurance Corporation (PRA - Free Report) , American Equity Investment Life Holding Company (AEL - Free Report) and Brighthouse Financial, Inc. (BHF - Free Report) . While ProAssurance sports a Zacks Rank #1 (Strong Buy), American Equity Investment and Brighthouse Financial carry a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
The bottom line of ProAssurance surpassed earnings estimates in three of the last four quarters and missed in one, the average being 150.9%. In the past year, the insurer has lost 13.6%.
The Zacks Consensus Estimate for ProAssurance’s 2022 and 2023 earnings has moved 25.9% and 13.9% north, respectively, in the past 60 days.
American Equity Investment surpassed earnings estimates in two of the last four quarters and missed in the other two, the average beat being 27.39%. In the past year, American Equity Investment has gained 24.4%.
The Zacks Consensus Estimate for AEL’s 2022 and 2023 earnings has moved 7.1% and 3.2% north, respectively, in the past 60 days.
The bottom line of Brighthouse Financial surpassed earnings estimates in each of the last four quarters, the average being 42.34%. In the past year, the insurer has lost 6.2%.
The Zacks Consensus Estimate for BHF’s 2022 and 2023 earnings has moved 17.3% and 3.6% north, respectively, in the past 30 days.
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Here's Why You Should Hold Sun Life Financial (SLF) Stock
Sun Life Financial Inc.’s (SLF - Free Report) growth in mutual fund sales, Hong Kong pension business, business growth, higher new business gains, solid capital position, and effective capital deployment makes it worth retaining in one’s portfolio.
Growth Projections
The Zacks Consensus Estimate for 2023 earnings per share is pegged at $4.90, indicating a year-over-year increase of 6.17%. 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
Sun Life currently carries a Zacks Rank #3 (Hold).
Business Tailwinds
Sun Life remains well-poised for growth in 2022, riding on premier asset management franchises at MFS and SLC Management as well as leading wealth and insurance market positions in Canada. Also, the shift toward more capital-light businesses in the United States as well as an established presence in attractive markets in Asia should benefit the insurer in the long run.
Asia sales are expected to gain from growth in mutual fund sales in India, money market sales in the Philippines and the Hong Kong pension business.
The Canada business is likely to gain from business growth, higher new business gains and experience-related items. Higher individual participating life insurance sales and higher large case group benefits sales in Sun Life Health should benefit Insurance sales.
Sun Life considers acquisitions a prudent approach to ramp up its growth profile. In September 2022, SLF agreed to acquire a 51% interest in Advisors Asset Management, Inc. (“AAM”) for $214 million, subject to customary adjustments with a put/call option to acquire the remaining 49% at the beginning of 2028.
The buyout is expected to enable SLF to extend its top-notch alternative investment capabilities to new clients and bolster the list of investment solutions that AAM can offer to the U.S. financial advisor market. The deal will also enable SLC Management as well as its affiliated investment managers to provide their investment strategies to the U.S. HNW market.
The insurer boasts a strong capital position, which remains strong with Life Insurance Capital Adequacy Test (LICAT) ratios of 128% at SLF and 124% at SLA. Cash and other liquid assets at the holding company increased to $4.7 billion. Sun Life targets minimum cash and other liquid assets at the holding company of $500 million.
Sun Life has increased its dividend at an eight-year (2015-2022) CAGR of 4.7%. It currently yields 5.3%, which is better than the industry average of 4.1%. Its dividend payout ratio is targeted within the 40-50% range. SLF remains focused on improving ROE and retaining flexibility for future growth opportunities.
Price Performance
In the past year, the stock has lost 26.5% compared with the industry’s decrease of 22.3%. Its focus on the expansion of its Asia business and global asset management business, favorable business mix, strategic acquisitions and solid capital position should help the stock bounce back.
Image Source: Zacks Investment Research
Stocks to Consider
Some better-ranked stocks from the insurance industry are ProAssurance Corporation (PRA - Free Report) , American Equity Investment Life Holding Company (AEL - Free Report) and Brighthouse Financial, Inc. (BHF - Free Report) . While ProAssurance sports a Zacks Rank #1 (Strong Buy), American Equity Investment and Brighthouse Financial carry a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
The bottom line of ProAssurance surpassed earnings estimates in three of the last four quarters and missed in one, the average being 150.9%. In the past year, the insurer has lost 13.6%.
The Zacks Consensus Estimate for ProAssurance’s 2022 and 2023 earnings has moved 25.9% and 13.9% north, respectively, in the past 60 days.
American Equity Investment surpassed earnings estimates in two of the last four quarters and missed in the other two, the average beat being 27.39%. In the past year, American Equity Investment has gained 24.4%.
The Zacks Consensus Estimate for AEL’s 2022 and 2023 earnings has moved 7.1% and 3.2% north, respectively, in the past 60 days.
The bottom line of Brighthouse Financial surpassed earnings estimates in each of the last four quarters, the average being 42.34%. In the past year, the insurer has lost 6.2%.
The Zacks Consensus Estimate for BHF’s 2022 and 2023 earnings has moved 17.3% and 3.6% north, respectively, in the past 30 days.