It has been about a month since the last earnings report for Sun Life (SLF - Free Report) . Shares have lost about 1.9% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Sun Life due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts. <p style="text-align: justify;"><strong>Sun Life's Q2 Earnings Grow on Sturdy Asia Business</strong><br /><br />Sun Life Financial Inc. reported second-quarter 2018 underlying net income of $565 million (C$729 million), up 10.3% year over year. This improvement was fueled by business growth and a favorable morbidity experience, partially offset by an investment experience, expenses and the impact of the Canadian dollar’s movement.<br /><br />Insurance sales increased 12% year over year to $513.6 billion (C$663 billion), attributable to higher sales in SLF Canada and SLF Asia. Wealth sales were down 16% year over year to $23.9 million (C$30.8 billion) in the quarter under review owing to lower wealth sales in both SLF Canada and SLF Asia.<br /><br />Premiums and deposits were $28.7 billion (C$37 billion), down 4.3% year over year on lower premium revenues, segregated fund deposits, managed fund sales, ASO premium and deposit equivalents as well as mutual fund sales.<br /><br />Net premiums rose 13.8% year over year to $3.3 billion (C$4.3 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.<br /><br /><strong>Segment Results</strong><br /><br /><strong>SLF Canada</strong>’s underlying net income declined 4.1% year over year to $189.8 million (C$245 million) because of lower new business gains in GRS and soft gains from credit experience. The quarter concerned witnessed higher insurance sales. Wealth sales decreased primarily due to GRS sales.<br /><br /><strong>SLF U.S</strong>.’s underlying net income was $97 million, which shot up 32.9% from the prior-year quarter’s count. This upside stemmed up from an improved morbidity experience and the lower income tax rate in the United States, partially offset by a less favorable mortality experience in In-force Management.<br /><br /><strong>SLF Asset Management</strong>’s underlying operating net income of $164 million grew 13.9% year over year, banking on higher average net assets and lower taxes.<br /><br /><strong>SLF Asia </strong>reported an underlying income of $112.3 million (C$145 million), surging 86.5% year over year, reflecting strong business growth and new business gains. Insurance sales improved in the quarter under discussion, attributable to double-digit growth across all markets.<br /><br /><strong>Financial Update</strong><br /><br />Global assets under management were $747.1 billion (C$986.1 billion), up nearly 5.2% year over year.<br /><br />Sun Life Assurance’s Minimum Continuing Capital and Surplus Requirements (LICAT) ratio was 134% as of Jun 30, 2018. While the LICAT ratio for Sun Life (including cash and other liquid assets) was 149%.<br /><br />Sun Life’s return on equity of 13.5% in the second quarter expanded 210 basis points year over year owing to higher earnings. Underlying ROE of 14% grew 30 basis points year over year.<br /><br />Leverage ratio of 21.8% at second-quarter end improved 70 basis points year over year.<br /><br /><strong>Dividend Update</strong><br /><br />The board of directors of Sun Life announced a quarterly dividend to 47.5 cents per share, underlining the company’s solid capital position and growth prospects.</p>
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in fresh estimates.
Currently, Sun Life has a poor Growth Score of F, however its Momentum Score is doing a lot better with an A. Charting a somewhat similar path, 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.
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Sun Life has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.