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Reasons Why Investors Should Retain Unum Group (UNM) Now
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Unum Group (UNM - Free Report) has been favored by investors on the back of favorable sales trends and risk experience, strong persistency, an improving rate environment and a solid capital position.
Optimistic Growth Projections
The Zacks Consensus Estimate for Unum Group’s 2024 earnings per share indicates an increase of 9.2% from the year-ago reported number. The consensus estimate for revenues is pegged at $12.96 billion, implying a year-over-year improvement of 4.3%.
The consensus estimate for 2025 earnings per share and revenues indicates an increase of 5.7% and 3.7%, respectively, from the corresponding 2024 estimates.
Earnings have grown 9% in the past five years, better than the industry average of 3.8%.
Earnings Surprise History
Unum Group has a decent earnings surprise history. It beat estimates in three of the last four quarters and missed in one, the average beat being 2.96%.
Estimate Revision
The Zacks Consensus Estimate for 2024 and 2025 earnings has moved 1.4% and 1.6% north, respectively, in the past 30 days. This should instill investors' confidence in the stock.
Zacks Rank & Price Performance
UNM currently carries a Zacks Rank #3 (Hold). Year to date, the stock has gained 17.4% compared with the industry’s growth of 18.6%.
Image Source: Zacks Investment Research
Style Score
UNM has a favorable VGM Score of B. VGM Score helps identify stocks with the most attractive value, best growth and most promising momentum.
Return on Equity (ROE)
In the second quarter of 2024, Unum Group’s trailing 12-month ROE expanded 30 basis points year over year to 15.6%. ROE reflects the insurer’s efficiency in using shareholders’ funds. Also, the insurer’s return on invested capital (ROIC) has been increasing over the last few quarters, reflecting its efficiency in utilizing funds to generate income. ROIC in the trailing 12 months was 9.2%, better than the industry average of 7.9%.
Business Tailwinds
Premiums, the primary component of Unum’s top line, continue to gain from its healthy in-force block growth and higher sales. Unum Group expects sales growth in the range of 7-10% and premium growth in the band of 5-7% in 2024. For the long term, it expects sales growth in the range of 8-12% and premium growth in the range of 4-7%.
UNM 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.
Management estimates sales growth of 5-10% and premium growth of 5-7% in 2024 at Unum U.S. It expects sales growth in the range of 8-12% and premium growth in the band of 2-4% at Colonial Life for 2024.
UNM enjoys a solid capital position and substantial statutory earnings and capital, leading to financial flexibility.
In its concerted effort to distribute wealth to shareholders, UNM has hiked dividends 13 times in the last 12 years. Its recent 15% dividend hike takes the dividend payout ratio to around 20%.
Also, UNM expects to repurchase $500 million worth of shares in 2024. The insurer expects to hike dividends by 10-15% per year over the next five-year period. Unum Group banks on consistent cash flow for such capital payouts.
NMI Holdings’ earnings surpassed estimates in each of the last four quarters, the average surprise being 10.15%. Year to date, shares of NMIH have jumped 25.4%. The Zacks Consensus Estimate for NMIH’s 2024 and 2025 earnings implies year-over-year growth of 15.6% and 5.5%, respectively.
Root’s earnings surpassed estimates in each of the last four quarters, the average surprise being 47.87%. Year to date, shares of ROOT have jumped 310.2%. The Zacks Consensus Estimate for ROOT’s 2024 and 2025 earnings implies year-over-year growth of 60.6% and 37.5%, respectively.
The Progressive’s earnings surpassed estimates in each of the last four quarters, the average surprise being 24.08%. Year to date, shares of PGR have jumped 37.1%. The Zacks Consensus Estimate for PGR’s 2024 and 2025 earnings implies year-over-year growth of 96.7% and 5.3%, respectively.
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Reasons Why Investors Should Retain Unum Group (UNM) Now
Unum Group (UNM - Free Report) has been favored by investors on the back of favorable sales trends and risk experience, strong persistency, an improving rate environment and a solid capital position.
Optimistic Growth Projections
The Zacks Consensus Estimate for Unum Group’s 2024 earnings per share indicates an increase of 9.2% from the year-ago reported number. The consensus estimate for revenues is pegged at $12.96 billion, implying a year-over-year improvement of 4.3%.
The consensus estimate for 2025 earnings per share and revenues indicates an increase of 5.7% and 3.7%, respectively, from the corresponding 2024 estimates.
Earnings have grown 9% in the past five years, better than the industry average of 3.8%.
Earnings Surprise History
Unum Group has a decent earnings surprise history. It beat estimates in three of the last four quarters and missed in one, the average beat being 2.96%.
Estimate Revision
The Zacks Consensus Estimate for 2024 and 2025 earnings has moved 1.4% and 1.6% north, respectively, in the past 30 days. This should instill investors' confidence in the stock.
Zacks Rank & Price Performance
UNM currently carries a Zacks Rank #3 (Hold). Year to date, the stock has gained 17.4% compared with the industry’s growth of 18.6%.
Image Source: Zacks Investment Research
Style Score
UNM has a favorable VGM Score of B. VGM Score helps identify stocks with the most attractive value, best growth and most promising momentum.
Return on Equity (ROE)
In the second quarter of 2024, Unum Group’s trailing 12-month ROE expanded 30 basis points year over year to 15.6%. ROE reflects the insurer’s efficiency in using shareholders’ funds. Also, the insurer’s return on invested capital (ROIC) has been increasing over the last few quarters, reflecting its efficiency in utilizing funds to generate income. ROIC in the trailing 12 months was 9.2%, better than the industry average of 7.9%.
Business Tailwinds
Premiums, the primary component of Unum’s top line, continue to gain from its healthy in-force block growth and higher sales. Unum Group expects sales growth in the range of 7-10% and premium growth in the band of 5-7% in 2024. For the long term, it expects sales growth in the range of 8-12% and premium growth in the range of 4-7%.
UNM 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.
Management estimates sales growth of 5-10% and premium growth of 5-7% in 2024 at Unum U.S. It expects sales growth in the range of 8-12% and premium growth in the band of 2-4% at Colonial Life for 2024.
UNM enjoys a solid capital position and substantial statutory earnings and capital, leading to financial flexibility.
In its concerted effort to distribute wealth to shareholders, UNM has hiked dividends 13 times in the last 12 years. Its recent 15% dividend hike takes the dividend payout ratio to around 20%.
Also, UNM expects to repurchase $500 million worth of shares in 2024. The insurer expects to hike dividends by 10-15% per year over the next five-year period. Unum Group banks on consistent cash flow for such capital payouts.
Stocks to Consider
Some better-ranked stocks from the insurance industry are NMI Holdings Inc (NMIH - Free Report) , Root, Inc. (ROOT - Free Report) and The Progressive Corporation (PGR - Free Report) , each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
NMI Holdings’ earnings surpassed estimates in each of the last four quarters, the average surprise being 10.15%. Year to date, shares of NMIH have jumped 25.4%. The Zacks Consensus Estimate for NMIH’s 2024 and 2025 earnings implies year-over-year growth of 15.6% and 5.5%, respectively.
Root’s earnings surpassed estimates in each of the last four quarters, the average surprise being 47.87%. Year to date, shares of ROOT have jumped 310.2%. The Zacks Consensus Estimate for ROOT’s 2024 and 2025 earnings implies year-over-year growth of 60.6% and 37.5%, respectively.
The Progressive’s earnings surpassed estimates in each of the last four quarters, the average surprise being 24.08%. Year to date, shares of PGR have jumped 37.1%. The Zacks Consensus Estimate for PGR’s 2024 and 2025 earnings implies year-over-year growth of 96.7% and 5.3%, respectively.