We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Here's Why Investors Should Buy Unum Group (UNM) Stock Now
Read MoreHide Full Article
Unum Group (UNM - Free Report) has been favored by investors on the back of favorable growth estimates, strong persistency in group lines and the improvement of new product lines, increased premium income, prudent capital deployment and a solid capital position.
Optimistic Growth Projections
The Zacks Consensus Estimate for Unum Group’s 2024 earnings is pegged at $8.16 per share, indicating a 6.5% increase from the year-ago reported figure on 4.2% higher revenues of $12.95 billion. The consensus estimate for 2025 earnings is pegged at $8.72 per share, indicating a 6.9% increase from the year-ago reported figure on 3.5% higher revenues of $13.41 billion.
The expected long-term earnings growth rate is 8.1%, which is higher than the industry average of 7%.
Earnings Surprise History
Unum Group has a decent earnings surprise history. It beat estimates in three of the last four quarters and missed in one, the average beat being 5.19%.
Zacks Rank & Price Performance
UNM currently carries a Zacks Rank #2 (Buy). Over the past year, the stock has risen 11.5% compared with the industry’s growth of 10.8%.
Image Source: Zacks Investment Research
Style Score
UNM has a favorable VGM Score of B. VGM Score helps identify stocks with the most attractive value, best growth and most promising momentum. Back-tested results show that stocks with a VGM Score of A or B, when combined with a Zacks Rank #1 (Strong Buy) or 2, offer the best opportunities in the value investing space.
Return on Equity (ROE)
In the fourth quarter of 2023, Unum Group’s trailing 12-month ROE expanded 290 basis points to 16%. ROE reflects the insurer’s efficiency in using shareholders’ funds.
Business Tailwinds
Solid operational performance, favorable benefits experience, as well as strong top-line improvement in the core businesses should continue to fuel growth and help UNM achieve its targeted growth. Management remains focused on moving on to a mix of businesses with higher growth and stable margins.
In 2024, Unum Group expects sales growth in the range of 7-10%, premium growth in the band of 5-7% and adjusted operating ROE between 12% and 14% from core business. The insurer estimates 7-9% growth in adjusted operating earnings per share (EPS) in 2024. For the long term, UNM expects sales growth in the range of 8-12%, premium growth in the band of 4-7% and adjusted operating EPS growth between 8% and 10%.
Unum U.S. continues to benefit from disciplined sales trends, strong persistency in group lines and the growth of new product lines like dental and vision, which improve premium income.
The Colonial Life segment of the insurer should gain from improved premium income and favorable risk results, lower operating expenses and favorable benefits. Colonial Life expects sales growth in the range of 8-12%, premium growth in the 2-4% band and adjusted operating ROE between 20% and 22% in 2024.
Unum Group boasts a solid capital position. Sustained solid operating results have been fueling a strong level of statutory earnings and capital, cushioning financial flexibility. As of Dec 31, 2023, the weighted average risk-based capital ratio for the company’s traditional U.S. insurance companies was approximately 415% and holding company liquidity remains robust at $1.7 billion. Over the long term, the insurer expects a risk-based capital ratio of more than 350% and generates free cash flow between $1.2 billion and $1.4 billion.
UNM has consistently enhanced shareholders’ value through dividend hikes and share buybacks. Its continuous efforts to reduce share count are expected to bolster earnings. During 2023, the company repurchased 5.7 million shares for $252 million and doubled its buyback authorization to $500 million for 2024. The board approved a quarterly dividend hike of 10% in May 2023, marking the 14th dividend hike in the last 13 years.
Attractive Valuation
UNM shares are trading at a price to book value multiple of 0.99, lower than the industry average of 1.64. It also has an impressive Value Score of A. This style score helps find the most attractive value stocks.
Other Stocks to Consider
Some other top-ranked stocks from the insurance industry are Axis Capital Holdings Limited (AXS - Free Report) , Mercury General Corporation (MCY - Free Report) and Arch Capital Group Ltd. (ACGL - Free Report) . While Axis Capital and Mercury General sport a Zacks Rank #1 each, Arch Capital carries a Zacks Rank #2 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Axis Capital has a solid record of beating earnings estimates in each of the trailing four quarters, the average being 102.57%. Over the past year, the insurer has gained 1.3%.
The Zacks Consensus Estimate for the company’s 2024 and 2025 EPS is pegged at $10.10 and $11.07, indicating a year-over-year increase of 2.5% and 9.6%, respectively.
Mercury General beat estimates in three of the last four quarters and matched in one, the average being 3,417.48%. Over the past year, the insurer has rallied 40.1%.
The Zacks Consensus Estimate for the company’s 2024 and 2025 EPS is pegged at $2.90 and $3.90, indicating a year-over-year rise of 866.67% and 34.48%, respectively.
Arch Capital has a solid record of beating earnings estimates in each of the trailing four quarters, the average being 27.32%. Over the past year, ACGL has jumped 23.9%.
The Zacks Consensus Estimate for the company’s 2024 and 2025 revenues is pegged at $15.52 billion and $16.93 billion, indicating a year-over-year increase of 15% and 9%, respectively.
Unique Zacks Analysis of Your Chosen Ticker
Pick one free report - opportunity may be withdrawn at any time
Image: Bigstock
Here's Why Investors Should Buy Unum Group (UNM) Stock Now
Unum Group (UNM - Free Report) has been favored by investors on the back of favorable growth estimates, strong persistency in group lines and the improvement of new product lines, increased premium income, prudent capital deployment and a solid capital position.
Optimistic Growth Projections
The Zacks Consensus Estimate for Unum Group’s 2024 earnings is pegged at $8.16 per share, indicating a 6.5% increase from the year-ago reported figure on 4.2% higher revenues of $12.95 billion. The consensus estimate for 2025 earnings is pegged at $8.72 per share, indicating a 6.9% increase from the year-ago reported figure on 3.5% higher revenues of $13.41 billion.
The expected long-term earnings growth rate is 8.1%, which is higher than the industry average of 7%.
Earnings Surprise History
Unum Group has a decent earnings surprise history. It beat estimates in three of the last four quarters and missed in one, the average beat being 5.19%.
Zacks Rank & Price Performance
UNM currently carries a Zacks Rank #2 (Buy). Over the past year, the stock has risen 11.5% compared with the industry’s growth of 10.8%.
Image Source: Zacks Investment Research
Style Score
UNM has a favorable VGM Score of B. VGM Score helps identify stocks with the most attractive value, best growth and most promising momentum.
Back-tested results show that stocks with a VGM Score of A or B, when combined with a Zacks Rank #1 (Strong Buy) or 2, offer the best opportunities in the value investing space.
Return on Equity (ROE)
In the fourth quarter of 2023, Unum Group’s trailing 12-month ROE expanded 290 basis points to 16%. ROE reflects the insurer’s efficiency in using shareholders’ funds.
Business Tailwinds
Solid operational performance, favorable benefits experience, as well as strong top-line improvement in the core businesses should continue to fuel growth and help UNM achieve its targeted growth. Management remains focused on moving on to a mix of businesses with higher growth and stable margins.
In 2024, Unum Group expects sales growth in the range of 7-10%, premium growth in the band of 5-7% and adjusted operating ROE between 12% and 14% from core business. The insurer estimates 7-9% growth in adjusted operating earnings per share (EPS) in 2024. For the long term, UNM expects sales growth in the range of 8-12%, premium growth in the band of 4-7% and adjusted operating EPS growth between 8% and 10%.
Unum U.S. continues to benefit from disciplined sales trends, strong persistency in group lines and the growth of new product lines like dental and vision, which improve premium income.
The Colonial Life segment of the insurer should gain from improved premium income and favorable risk results, lower operating expenses and favorable benefits. Colonial Life expects sales growth in the range of 8-12%, premium growth in the 2-4% band and adjusted operating ROE between 20% and 22% in 2024.
Unum Group boasts a solid capital position. Sustained solid operating results have been fueling a strong level of statutory earnings and capital, cushioning financial flexibility. As of Dec 31, 2023, the weighted average risk-based capital ratio for the company’s traditional U.S. insurance companies was approximately 415% and holding company liquidity remains robust at $1.7 billion. Over the long term, the insurer expects a risk-based capital ratio of more than 350% and generates free cash flow between $1.2 billion and $1.4 billion.
UNM has consistently enhanced shareholders’ value through dividend hikes and share buybacks. Its continuous efforts to reduce share count are expected to bolster earnings. During 2023, the company repurchased 5.7 million shares for $252 million and doubled its buyback authorization to $500 million for 2024. The board approved a quarterly dividend hike of 10% in May 2023, marking the 14th dividend hike in the last 13 years.
Attractive Valuation
UNM shares are trading at a price to book value multiple of 0.99, lower than the industry average of 1.64. It also has an impressive Value Score of A. This style score helps find the most attractive value stocks.
Other Stocks to Consider
Some other top-ranked stocks from the insurance industry are Axis Capital Holdings Limited (AXS - Free Report) , Mercury General Corporation (MCY - Free Report) and Arch Capital Group Ltd. (ACGL - Free Report) . While Axis Capital and Mercury General sport a Zacks Rank #1 each, Arch Capital carries a Zacks Rank #2 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Axis Capital has a solid record of beating earnings estimates in each of the trailing four quarters, the average being 102.57%. Over the past year, the insurer has gained 1.3%.
The Zacks Consensus Estimate for the company’s 2024 and 2025 EPS is pegged at $10.10 and $11.07, indicating a year-over-year increase of 2.5% and 9.6%, respectively.
Mercury General beat estimates in three of the last four quarters and matched in one, the average being 3,417.48%. Over the past year, the insurer has rallied 40.1%.
The Zacks Consensus Estimate for the company’s 2024 and 2025 EPS is pegged at $2.90 and $3.90, indicating a year-over-year rise of 866.67% and 34.48%, respectively.
Arch Capital has a solid record of beating earnings estimates in each of the trailing four quarters, the average being 27.32%. Over the past year, ACGL has jumped 23.9%.
The Zacks Consensus Estimate for the company’s 2024 and 2025 revenues is pegged at $15.52 billion and $16.93 billion, indicating a year-over-year increase of 15% and 9%, respectively.