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Why Is Sun Life (SLF) Up 12.5% Since Last Earnings Report?
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It has been about a month since the last earnings report for Sun Life (SLF - Free Report) . Shares have added about 12.5% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Sun Life due for a pullback? 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 drivers.
Sun Life Financial Q1 Earnings Top Estimates, Rise Y/Y
Sun Life Financial delivered first-quarter 2020 operating earnings per share of 98 cents, which beat the Zacks Consensus Estimate by 24.1%. The bottom line increased 8.9% year over year.
Underlying net income of $574.1 million (C$770 million) was up 7% year over year. This improvement was fueled by higher investing activity in Canada and U.S., business growth, higher available-for-sale gains, higher new business gains and improved credit experience compared with the year-ago quarter. However, lower net investment returns on surplus in Canada and Corporate, unfavorable expense and mortality experience, less favorable morbidity experience and unfavorable other experience were partial offsets.
Insurance sales decreased 0.5% year over year to $578.5 million (C$776 million), attributable to drop in sales in Canada. However, increased sales in the United States and Asia limited the downside.
Wealth sales increased 66.4% year over year to $44.7 billion (C$59.9 billion) in the quarter under review driven by higher sales in Canada, Asia and Asset Management.
Value of new business declined 0.5% to $283.3 million (C$380 million).
Segment Results
SLF Canada’s underlying net income increased 8% year over year to $190.6 million (C$256 million) owing to business growth and investment-related contributions, partially offset by unfavorable expense and morbidity experience in Group Benefits.
SLF U.S.’ underlying net income was $120 million (C$161 million), up 7% from the prior-year quarter owing to owing to higher investing activity, higher AFS gains and new business gains. However, unfavorable mortality experience and less favorable, but still positive, morbidity experience compared to elevated favorable morbidity experience in the first quarter of 2019 were partial offsets.
SLF Asset Management’s underlying net income of $180 million (C$242 million) increased 7% year over year, driven by higher average net assets in MFS and higher income in SLC, The company benefited from by the BGO acquisition that closed in 2020. However, change in net investment returns of $31 million in MFS due to declines in equity markets and widening of credit spreads was a partial offset.
SLF Asia reported underlying net income of $115.6 million (C$155 million), which rose 27% year over year owing to favorable credit experience, new business gains primarily in International and Hong Kong and improved mortality experience, partially offset by other experience from its joint ventures.
Financial Update
Global assets under management were $724.7 billion (C$1,023 billion), up 15.7% year over year.
Sun Life Assurance’s Minimum Continuing Capital and Surplus Requirements (LICAT) ratio was 130% as Mar 31, 2020, flat year over year.
The LICAT ratio for Sun Life (including cash and other liquid assets) was 143%, flat year over yearl.
Sun Life’s return on equity of 7.2% in the first quarter, down 430 basis points (bps) year over year. Underlying ROE of 14.2% expanded 90 basis points year over year.
Leverage ratio of 207% improved 50 bps year over year.
Dividend Update
On May 5, 2020, the company’s board of directors approved a dividend of 55 cents per share. The amount will be paid out on Jun 30, 2020 to shareholders of record at the close of business on May 27.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision flatlined during the past month.
VGM Scores
Currently, Sun Life has a subpar Growth Score of D, however its Momentum Score is doing a bit better with a C. 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.
Outlook
Sun Life has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Why Is Sun Life (SLF) Up 12.5% Since Last Earnings Report?
It has been about a month since the last earnings report for Sun Life (SLF - Free Report) . Shares have added about 12.5% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Sun Life due for a pullback? 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 drivers.
Sun Life Financial Q1 Earnings Top Estimates, Rise Y/Y
Sun Life Financial delivered first-quarter 2020 operating earnings per share of 98 cents, which beat the Zacks Consensus Estimate by 24.1%. The bottom line increased 8.9% year over year.
Underlying net income of $574.1 million (C$770 million) was up 7% year over year. This improvement was fueled by higher investing activity in Canada and U.S., business growth, higher available-for-sale gains, higher new business gains and improved credit experience compared with the year-ago quarter. However, lower net investment returns on surplus in Canada and Corporate, unfavorable expense and mortality experience, less favorable morbidity experience and unfavorable other experience were partial offsets.
Insurance sales decreased 0.5% year over year to $578.5 million (C$776 million), attributable to drop in sales in Canada. However, increased sales in the United States and Asia limited the downside.
Wealth sales increased 66.4% year over year to $44.7 billion (C$59.9 billion) in the quarter under review driven by higher sales in Canada, Asia and Asset Management.
Value of new business declined 0.5% to $283.3 million (C$380 million).
Segment Results
SLF Canada’s underlying net income increased 8% year over year to $190.6 million (C$256 million) owing to business growth and investment-related contributions, partially offset by unfavorable expense and morbidity experience in Group Benefits.
SLF U.S.’ underlying net income was $120 million (C$161 million), up 7% from the prior-year quarter owing to owing to higher investing activity, higher AFS gains and new business gains. However, unfavorable mortality experience and less favorable, but still positive, morbidity experience compared to elevated favorable morbidity experience in the first quarter of 2019 were partial offsets.
SLF Asset Management’s underlying net income of $180 million (C$242 million) increased 7% year over year, driven by higher average net assets in MFS and higher income in SLC, The company benefited from by the BGO acquisition that closed in 2020. However, change in net investment returns of $31 million in MFS due to declines in equity markets and widening of credit spreads was a partial offset.
SLF Asia reported underlying net income of $115.6 million (C$155 million), which rose 27% year over year owing to favorable credit experience, new business gains primarily in International and Hong Kong and improved mortality experience, partially offset by other experience from its joint ventures.
Financial Update
Global assets under management were $724.7 billion (C$1,023 billion), up 15.7% year over year.
Sun Life Assurance’s Minimum Continuing Capital and Surplus Requirements (LICAT) ratio was 130% as Mar 31, 2020, flat year over year.
The LICAT ratio for Sun Life (including cash and other liquid assets) was 143%, flat year over yearl.
Sun Life’s return on equity of 7.2% in the first quarter, down 430 basis points (bps) year over year. Underlying ROE of 14.2% expanded 90 basis points year over year.
Leverage ratio of 207% improved 50 bps year over year.
Dividend Update
On May 5, 2020, the company’s board of directors approved a dividend of 55 cents per share. The amount will be paid out on Jun 30, 2020 to shareholders of record at the close of business on May 27.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision flatlined during the past month.
VGM Scores
Currently, Sun Life has a subpar Growth Score of D, however its Momentum Score is doing a bit better with a C. 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.
Outlook
Sun Life has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.