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SLF Stock Hits 52-Week High: Time to Hold Despite Expensive Valuation?
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Key Takeaways
SLF is increasing its presence across Asian markets, with the region contributing 21% of earnings.
Asset Management growth supports higher ROE, lower capital needs and more predictable earnings.
Strong capital levels support dividends, buybacks and continued investment in growth initiatives.
Sun Life Financial Inc. (SLF - Free Report) hit a 52-week high of $78.98 on June 23. Shares closed at $77.66 after gaining 24.4% in the year-to-date period, outperforming the industry, the sector, and the Zacks S&P 500 Composite.
Sun Life Financial has outperformed its peers, including Reinsurance Group of America, Incorporated (RGA - Free Report) , Manulife Financial Corp (MFC - Free Report) and Primerica, Inc. (PRI - Free Report) . Shares of RGA, MFC, and PRI have gained 4.1%, 10.8% and 9.8%, respectively, in the year-to-date period.
Image Source: Zacks Investment Research
With a market capitalization of $43.04 billion, the average number of shares traded in the last three months was 0.7 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 $72.18 and $64.42, 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 12.98X is higher than the industry average of 10.43X.
SLF’s Growth Projection Encourages
The Zacks Consensus Estimate for Sun Life’s 2026 earnings per share indicates a year-over-year increase of 8%. The consensus estimate for 2027 earnings per share indicates an increase of 8.1% from the corresponding 2026 estimates.
Optimist Analyst Sentiment on SLF
Two of the three analysts covering the stock have raised estimates for 2026, and one of the three analysts covering the stock has raised the same for 2027 over the past 60 days. Thus, the Zacks Consensus Estimate for 2026 and 2027 earnings has moved up 1.6% and 0.8%, respectively, in the past 60 days.
SLF’s Favorable Return on Capital
SLF’s return on equity (ROE) for the trailing 12 months is 17.8%, better than the industry average of 15.7%. 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.
Conclusion
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.
SLF also has a VGM Score of B. Stocks with a favorable VGM Score are those with the most attractive value, best growth and most promising momentum compared with peers. Its impressive dividend history as well as attractive valuations are other positives.
Solid financial position, favorable growth projections, optimistic analyst sentiment and higher return on capital should continue to benefit SLF over the long term. The stock currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
View the Zacks #1 Rank List
Image: Bigstock
SLF Stock Hits 52-Week High: Time to Hold Despite Expensive Valuation?
Key Takeaways
Sun Life Financial Inc. (SLF - Free Report) hit a 52-week high of $78.98 on June 23. Shares closed at $77.66 after gaining 24.4% in the year-to-date period, outperforming the industry, the sector, and the Zacks S&P 500 Composite.
Sun Life Financial has outperformed its peers, including Reinsurance Group of America, Incorporated (RGA - Free Report) , Manulife Financial Corp (MFC - Free Report) and Primerica, Inc. (PRI - Free Report) . Shares of RGA, MFC, and PRI have gained 4.1%, 10.8% and 9.8%, respectively, in the year-to-date period.
Image Source: Zacks Investment Research
With a market capitalization of $43.04 billion, the average number of shares traded in the last three months was 0.7 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 $72.18 and $64.42, 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 12.98X is higher than the industry average of 10.43X.
SLF’s Growth Projection Encourages
The Zacks Consensus Estimate for Sun Life’s 2026 earnings per share indicates a year-over-year increase of 8%. The consensus estimate for 2027 earnings per share indicates an increase of 8.1% from the corresponding 2026 estimates.
Optimist Analyst Sentiment on SLF
Two of the three analysts covering the stock have raised estimates for 2026, and one of the three analysts covering the stock has raised the same for 2027 over the past 60 days. Thus, the Zacks Consensus Estimate for 2026 and 2027 earnings has moved up 1.6% and 0.8%, respectively, in the past 60 days.
SLF’s Favorable Return on Capital
SLF’s return on equity (ROE) for the trailing 12 months is 17.8%, better than the industry average of 15.7%. 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.
Conclusion
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.
SLF also has a VGM Score of B. Stocks with a favorable VGM Score are those with the most attractive value, best growth and most promising momentum compared with peers. Its impressive dividend history as well as attractive valuations are other positives.
Solid financial position, favorable growth projections, optimistic analyst sentiment and higher return on capital should continue to benefit SLF over the long term. The stock currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.