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UNM Stock Trading at a Discount to Industry at 1.2X: Time to Hold?
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Key Takeaways
UNM expects 2025 premium growth of 3-6%, operating ROE of 21-23%, and EPS of about $8.50.
Unum's Unum U.S. and Colonial Life see strong sales, new dental and vision lines, and risk results.
UNM raised its dividend 10% in Q2 2025 and plans buybacks within its $500M-$1B range.
Unum Group (UNM - Free Report) shares are trading at a discount compared to the Zacks Accident and Health Insurance industry. Its forward price-to-book value of 1.2X is lower than the industry average of 1.75X, the Finance sector’s 4.28X and the Zacks S&P 500 Composite’s 8.49X. The insurer has a Value Score of B.
The insurer has a market capitalization of $13.13 billion. The average volume of shares traded in the last three months was 1.3 million. Shares of AMERISAFE, Inc. (AMSF - Free Report) , Globe Life Inc. (GL - Free Report) and Aflac Incorporated (AFL - Free Report) are trading at a multiple higher than the industry average.
Image Source: Zacks Investment Research
UNM's Price Performance
Shares of Unum Group have risen 4.8% in the past year compared with the industry’s growth of 6.3%.
Image Source: Zacks Investment Research
UNM Trading Above 50-Day and 200-Day Moving Averages
Shares of Unum Group closed at $77.12 on Friday, near its 52-week high of $84.48. This proximity underscores investor confidence. It has the ingredients for further price appreciation. The stock is trading above the 50-day and 200-day simple moving averages (SMA) of $75.95 and $77.10, respectively, indicating solid upward momentum. SMA is a widely used technical analysis tool to predict future price trends by analyzing historical price data.
UNM’s Growth Projection Encourages
The Zacks Consensus Estimate for Unum Group’s 2025 revenues is pegged at $13.19 billion, implying a year-over-year improvement of 2.3%. The consensus estimate for 2026 earnings per share and revenues indicates an increase of 10.2% and 2.8%, respectively, from the corresponding 2025 estimates.
Earnings have grown 12.9% in the past five years, better than the industry average of 5.5%. The expected long-term earnings growth rate is 6.1%, outperforming the industry average of 5.4%.
Average Target Price for UNM Suggests Upside
Based on short-term price targets offered by 15 analysts, the Zacks average price target is $93.93 per share. The average suggests a potential 22.7% upside from the last closing price.
Image Source: Zacks Investment Research
Bearish Analyst Sentiment on UNM
Three of the seven analysts covering the stock have lowered estimates for 2025, while two analysts have lowered the same for 2026 over the past 30 days. The Zacks Consensus Estimate for 2025 earnings has moved down 0.7% in the past 30 days, while the same for 2026 has moved down 0.4% in the same time frame.
Factors Impacting UNM
Premiums, the primary component of UNM’s top line, continue to gain from its healthy in-force block growth and higher sales. In 2025, Unum Group expects premium growth in the band of 3-6% and adjusted operating return on equity (ROE) between 21% and 23% from the core business. For 2025, UNM expects after-tax adjusted operating income per share of approximately $8.50.
Unum Group is poised to grow on the operational excellence of Unum U.S. and Colonial Life. Encouraging sales trends, strong persistency in group lines and growth of new product lines like dental and vision, coupled with favorable risk results, should benefit Unum U.S. and Colonial Life, the two largest operating segments.
The pipeline for group sales over the next two quarters is healthy, and it expects overall sales to meet the expectations of 5% to 10% growth for 2025, for Unum U.S.
Operating income in the Colonial Life Segment has risen over the last few years, banking on improving premium income and favorable risk results. Premium income should continue to increase due to prior period sales in all product lines. Management remains focused on moving on to a mix of businesses with higher growth and stable margins.
Unum Group enjoys a solid capital position and substantial statutory earnings and capital, leading to financial flexibility.
UNM’s Impressive Dividend History
Unum Group has consistently enhanced shareholders’ value through dividend hikes. The board has increased the shareholder dividend by 10%, effective in the second quarter of 2025, putting the dividend payout ratio right around 20%. It also marked the 17th dividend hike in the last 16 years. The dividend yield of the company was 2.12%, making it an attractive pick for yield-seeking investors.
For the remainder of 2025, UNM remains on track to repurchase shares at the top end of the previously announced range of $500 million to $1 billion. UNM expects to return approximately $300 million to shareholders through dividends. These actions position it to deliver a total capital return of approximately $1.3 billion to shareholders in 2025.
Conclusion
Favorable sales trends and risk experience, strong persistency, an improving rate environment, solid capital position, higher return on capital and effective capital deployment should continue to favor UNM over the long term. The insurer should continue to gain from favorable growth estimates as well as the affordability of the stock. It is, therefore, wise to retain this Zacks Rank #3 (Hold) stock at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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UNM Stock Trading at a Discount to Industry at 1.2X: Time to Hold?
Key Takeaways
Unum Group (UNM - Free Report) shares are trading at a discount compared to the Zacks Accident and Health Insurance industry. Its forward price-to-book value of 1.2X is lower than the industry average of 1.75X, the Finance sector’s 4.28X and the Zacks S&P 500 Composite’s 8.49X. The insurer has a Value Score of B.
The insurer has a market capitalization of $13.13 billion. The average volume of shares traded in the last three months was 1.3 million.
Shares of AMERISAFE, Inc. (AMSF - Free Report) , Globe Life Inc. (GL - Free Report) and Aflac Incorporated (AFL - Free Report) are trading at a multiple higher than the industry average.
Image Source: Zacks Investment Research
UNM's Price Performance
Shares of Unum Group have risen 4.8% in the past year compared with the industry’s growth of 6.3%.
Image Source: Zacks Investment Research
UNM Trading Above 50-Day and 200-Day Moving Averages
Shares of Unum Group closed at $77.12 on Friday, near its 52-week high of $84.48. This proximity underscores investor confidence. It has the ingredients for further price appreciation. The stock is trading above the 50-day and 200-day simple moving averages (SMA) of $75.95 and $77.10, respectively, indicating solid upward momentum. SMA is a widely used technical analysis tool to predict future price trends by analyzing historical price data.
UNM’s Growth Projection Encourages
The Zacks Consensus Estimate for Unum Group’s 2025 revenues is pegged at $13.19 billion, implying a year-over-year improvement of 2.3%. The consensus estimate for 2026 earnings per share and revenues indicates an increase of 10.2% and 2.8%, respectively, from the corresponding 2025 estimates.
Earnings have grown 12.9% in the past five years, better than the industry average of 5.5%. The expected long-term earnings growth rate is 6.1%, outperforming the industry average of 5.4%.
Average Target Price for UNM Suggests Upside
Based on short-term price targets offered by 15 analysts, the Zacks average price target is $93.93 per share. The average suggests a potential 22.7% upside from the last closing price.
Image Source: Zacks Investment Research
Bearish Analyst Sentiment on UNM
Three of the seven analysts covering the stock have lowered estimates for 2025, while two analysts have lowered the same for 2026 over the past 30 days. The Zacks Consensus Estimate for 2025 earnings has moved down 0.7% in the past 30 days, while the same for 2026 has moved down 0.4% in the same time frame.
Factors Impacting UNM
Premiums, the primary component of UNM’s top line, continue to gain from its healthy in-force block growth and higher sales. In 2025, Unum Group expects premium growth in the band of 3-6% and adjusted operating return on equity (ROE) between 21% and 23% from the core business. For 2025, UNM expects after-tax adjusted operating income per share of approximately $8.50.
Unum Group is poised to grow on the operational excellence of Unum U.S. and Colonial Life. Encouraging sales trends, strong persistency in group lines and growth of new product lines like dental and vision, coupled with favorable risk results, should benefit Unum U.S. and Colonial Life, the two largest operating segments.
The pipeline for group sales over the next two quarters is healthy, and it expects overall sales to meet the expectations of 5% to 10% growth for 2025, for Unum U.S.
Operating income in the Colonial Life Segment has risen over the last few years, banking on improving premium income and favorable risk results. Premium income should continue to increase due to prior period sales in all product lines. Management remains focused on moving on to a mix of businesses with higher growth and stable margins.
Unum Group enjoys a solid capital position and substantial statutory earnings and capital, leading to financial flexibility.
UNM’s Impressive Dividend History
Unum Group has consistently enhanced shareholders’ value through dividend hikes. The board has increased the shareholder dividend by 10%, effective in the second quarter of 2025, putting the dividend payout ratio right around 20%. It also marked the 17th dividend hike in the last 16 years. The dividend yield of the company was 2.12%, making it an attractive pick for yield-seeking investors.
For the remainder of 2025, UNM remains on track to repurchase shares at the top end of the previously announced range of $500 million to $1 billion. UNM expects to return approximately $300 million to shareholders through dividends. These actions position it to deliver a total capital return of approximately $1.3 billion to shareholders in 2025.
Conclusion
Favorable sales trends and risk experience, strong persistency, an improving rate environment, solid capital position, higher return on capital and effective capital deployment should continue to favor UNM over the long term. The insurer should continue to gain from favorable growth estimates as well as the affordability of the stock. It is, therefore, wise to retain this Zacks Rank #3 (Hold) stock at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.