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SLF Stock Near 52-Week High: Time to Hold Despite Expensive Valuation?
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Key Takeaways
SLF expands across Asia, with markets like China and India lifting the region's share of earnings to 21%.
SLF is shifting growth toward voluntary benefits and capital-light products for predictable earnings.
SLF is strengthening asset management and using its strong capital position to fund dividends and buybacks.
Sun Life Financial Inc. (SLF - Free Report) closed at $62.15 on Monday, near its 52-week high of $66.81. This proximity underscores investor confidence. It has the ingredients for further price appreciation.
Shares have gained 4.9% in the past year compared with the industry’s growth of 8.6%.
Sun Life Financial has outperformed its peers, Reinsurance Group of America, Incorporated (RGA - Free Report) and Primerica, Inc. (PRI - Free Report) , which have lost 1% and 3.4%, respectively, in the past year. Shares of Manulife Financial Corp (MFC - Free Report) have gained 19.2% in the past year.
Image Source: Zacks Investment Research
With a market capitalization of $34.72 billion, the average number of shares traded in the last three months was 0.4 million.
SLF Trading Above 50-Day and 200-Day Moving Averages
Shares of Sun Life Financial are trading above the 50-day and 200-day simple moving averages (SMA) of $60.07 and $60.17, indicating solid upward momentum. SMA is a widely used technical analysis tool to predict future price trends by analyzing historical price data.
Image Source: Zacks Investment Research
SLF Shares are Expensive
Sun Life Financial shares are trading at a premium to the industry. The company’s price-to-earnings ratio of 10.97X is higher than the industry average of 8.09X.
Target Price Reflects Potential Downside
Based on short-term price targets offered by 13 analysts, the Zacks average price target is $66.30 per share. The average indicates a potential 7.7% upside from the last closing price.
Image Source: Zacks Investment Research
SLF’s Growth Projection Encourages
The Zacks Consensus Estimate for Sun Life’s 2025 earnings per share indicates a year-over-year increase of 8.8%. The consensus estimate for 2026 earnings per share indicates an increase of 7.2% from the corresponding 2025 estimates.
Optimist Analyst Sentiment on SLF
One of the two analysts covering the stock has raised estimates for 2025 and 2026 over the past 30 days. Thus, the Zacks Consensus Estimate for 2025 and 2026 earnings has moved up 1.1% and 1.2%, respectively, in the past 30 days.
Image Source: Zacks Investment Research
SLF’s Favorable Return on Capital
SLF’s return on equity (ROE) for the trailing 12 months is 16.9%, better than the industry average of 15.4%. This reflects SLF’s efficiency in utilizing shareholders’ funds. Underlying ROE continues to trend toward a medium-term financial objective of 18% plus, thus reflecting a sustained emphasis on capital-light businesses.
Key Points to Note for SLF
Sun Life Financial is focusing on the emerging economies of Asia, which are expected to provide higher returns and growth than the North American markets. It has a solid presence in China, the Philippines, India, Hong Kong and Indonesia and has also forayed into Malaysia and Vietnam. The contribution from the Asia business to SLF’s earnings has increased to 21% over the last few years.
Sun Life Financial envisions itself as one of the top five players and remains focused on growing its voluntary benefits business. The life insurer is also improving its business mix and shifting its growth focus toward products that require lower capital and offer more predictable earnings.
SLF has been working to strengthen Asset Management, which provides a higher ROE, requires lower capital, witnesses lesser volatility and has the potential for an earnings upside. Thus, Sun Life Investment Management’s investments in private fixed-income mortgages and real estate, as well as in pension plans and other institutional investors, should bear fruit.
Banking on its sturdy capital position, SLF distributes wealth to shareholders in the form of higher dividends and share buybacks.
End Notes
The ongoing shift to fee-based capital-light businesses bodes well for growth. Operational efficiency has been aiding Sun Life in building a strong capital position. Consistent wealth distribution makes it an attractive pick for yield-seeking investors. Its dividend payout ratio is targeted within the 40-50% range.
Image: Bigstock
SLF Stock Near 52-Week High: Time to Hold Despite Expensive Valuation?
Key Takeaways
Sun Life Financial Inc. (SLF - Free Report) closed at $62.15 on Monday, near its 52-week high of $66.81. This proximity underscores investor confidence. It has the ingredients for further price appreciation.
Shares have gained 4.9% in the past year compared with the industry’s growth of 8.6%.
Sun Life Financial has outperformed its peers, Reinsurance Group of America, Incorporated (RGA - Free Report) and Primerica, Inc. (PRI - Free Report) , which have lost 1% and 3.4%, respectively, in the past year. Shares of Manulife Financial Corp (MFC - Free Report) have gained 19.2% in the past year.
Image Source: Zacks Investment Research
With a market capitalization of $34.72 billion, the average number of shares traded in the last three months was 0.4 million.
SLF Trading Above 50-Day and 200-Day Moving Averages
Shares of Sun Life Financial are trading above the 50-day and 200-day simple moving averages (SMA) of $60.07 and $60.17, indicating solid upward momentum. SMA is a widely used technical analysis tool to predict future price trends by analyzing historical price data.
Image Source: Zacks Investment Research
SLF Shares are Expensive
Sun Life Financial shares are trading at a premium to the industry. The company’s price-to-earnings ratio of 10.97X is higher than the industry average of 8.09X.
Target Price Reflects Potential Downside
Based on short-term price targets offered by 13 analysts, the Zacks average price target is $66.30 per share. The average indicates a potential 7.7% upside from the last closing price.
Image Source: Zacks Investment Research
SLF’s Growth Projection Encourages
The Zacks Consensus Estimate for Sun Life’s 2025 earnings per share indicates a year-over-year increase of 8.8%. The consensus estimate for 2026 earnings per share indicates an increase of 7.2% from the corresponding 2025 estimates.
Optimist Analyst Sentiment on SLF
One of the two analysts covering the stock has raised estimates for 2025 and 2026 over the past 30 days. Thus, the Zacks Consensus Estimate for 2025 and 2026 earnings has moved up 1.1% and 1.2%, respectively, in the past 30 days.
Image Source: Zacks Investment Research
SLF’s Favorable Return on Capital
SLF’s return on equity (ROE) for the trailing 12 months is 16.9%, better than the industry average of 15.4%. This reflects SLF’s efficiency in utilizing shareholders’ funds. Underlying ROE continues to trend toward a medium-term financial objective of 18% plus, thus reflecting a sustained emphasis on capital-light businesses.
Key Points to Note for SLF
Sun Life Financial is focusing on the emerging economies of Asia, which are expected to provide higher returns and growth than the North American markets. It has a solid presence in China, the Philippines, India, Hong Kong and Indonesia and has also forayed into Malaysia and Vietnam. The contribution from the Asia business to SLF’s earnings has increased to 21% over the last few years.
Sun Life Financial envisions itself as one of the top five players and remains focused on growing its voluntary benefits business. The life insurer is also improving its business mix and shifting its growth focus toward products that require lower capital and offer more predictable earnings.
SLF has been working to strengthen Asset Management, which provides a higher ROE, requires lower capital, witnesses lesser volatility and has the potential for an earnings upside. Thus, Sun Life Investment Management’s investments in private fixed-income mortgages and real estate, as well as in pension plans and other institutional investors, should bear fruit.
Banking on its sturdy capital position, SLF distributes wealth to shareholders in the form of higher dividends and share buybacks.
End Notes
The ongoing shift to fee-based capital-light businesses bodes well for growth. Operational efficiency has been aiding Sun Life in building a strong capital position. Consistent wealth distribution makes it an attractive pick for yield-seeking investors. Its dividend payout ratio is targeted within the 40-50% range.
Given the premium valuation, investors should wait for a better entry point for this Zacks Rank #3 (Hold) stock. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.