It has been about a month since the last earnings report for Sun Life Financial Inc. (SLF - Free Report) . Shares have added about 2.4% in that time frame.
Will the recent positive trend continue leading up to its next earnings release, or is SLF due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Sun Life's (SLF - Free Report) Q1 Earnings Up on Solid Segmental Growth
Sun Life Financial reported first-quarter 2018 underlying net income of $609 million (C$770 million), up 14.5% year over year. This improvement was fueled by interest on par seed capital, strong business growth, the lower U.S. income tax rate and favorable investment experience.
Insurance sales decreased 13.9% year over year to $526 billion (C$665 billion), attributable to lower sales in SLF Canada. Wealth sales were up 5.6% year over year to $31.5 million (C$39.8 billion) in the quarter.
Premiums and deposits were $36.5 billion (C$46.1 billion), up 9% year over year on the back of higher net premium revenues and mutual fund sales.
Net premiums surged 30.3% year over year to $3.6 billion (C$4.6 billion), attributable to a favorable impact of the partial recapture of a reinsurance agreement in Group Benefits and an increase in Group Retirement Services in SLF Canada. However, negative currency impact from the change in the Canadian dollar and lower premiums in Hong Kong and International in SLF Asia limited the upside.
SLF Canada’s underlying net income increased 28.8% year over year to $233 million (C$295 million), driven by interest on par seed capital and a positive investment experience, partially offset by an unfavorable mortality and morbidity experience. The reported quarter witnessed declined insurance sales. Wealth sales decreased primarily due to GRS sales.
SLF U.S.’s underlying net income was $102 million, shot up 126.7% from the prior-year quarter. This upside stemmed up from interest on par seed capital within In-force Management, favorable morbidity experience, investment activity and the lower tax rate in the United States.
SLF Asset Management’s underlying operating net income of $176 million rose 32.3% year over year, banking on higher average net assets and lower taxes.
SLF Asia reported an underlying income of $101 million (C$128 million), up nearly 32% year over year, reflecting strong business growth. Insurance sales improved in the quarter under review, attributable to double-digit growth across all markets, except Hong Kong and International.
Global assets under management were $759.4 billion (C$978.9 billion), up nearly 5.6% year over year.
Sun Life Assurance’s Minimum Continuing Capital and Surplus Requirements (LICAT) ratio was 139% as of Mar 31, 2018. The LICAT ratio for Sun Life (including cash and other liquid assets) was 149%.
Sun Life reported return on equity of 13.1% in the first quarter, having expanded 210 basis points year over year owing to higher earnings. Underlying ROE of 15.1% grew 360 basis points year over year.
Leverage ratio of 22.2% at the quarter-end improved 40 basis points year over year.
Effective first-quarter 2018, the company transferred its International business unit from SLF U.S. to SLF Asia. By combining our SLF Asia and International capabilities, we expect to accelerate the development process of our high net worth insurance business in Asia. SLF U.S. will focus on growing our U.S. group benefits business and managing the in-force block of U.S. individual insurance.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates flatlined during the past month. There has been one revision higher for the current quarter compared to one lower.
Sun Life Financial Inc. Price and Consensus
At this time, SLF has an average Growth Score of C, though it is lagging a bit on the momentum front with a D. However, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Our style scores indicate that the stock is more suitable for value investors than growth investors.
SLF has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.