雅虎香港財經 Unum (UNM) Shares Gain 12% YTD: Will the Upside Continue?
Unum Group’s UNM shares have gained 12.4% year to date, outperforming the industry’s increase of 8.4% and the Finance sector’s rise of 5% in the said time frame.
Favorable sales trends and risk experience, strong persistency, an improving rate environment and a solid capital position continue to drive the stock of this Zacks Rank #3 (Hold) insurer
It has a VGM Score of B. This helps to identify stocks with the most attractive value, growth and momentum.
UNM’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 9.4%, better than the industry average of 7.9%.
Unum estimates adjusted operating return on equity (ROE) between 12% and 14% from the core business in 2024.
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Will the Rally Last?
Premiums, the primary component of Unum’s top line, continue to gain from its healthy in-force block growth and higher sales. We estimate 2026 premiums to witness a three-year CAGR of 4.4%. 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%.
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. and sales growth in the range of 8-12% and premium growth in the range of 2-4% at Colonial Life for the same period.
We expect 2026 premiums to rise at a three-year CAGR of 4.1% at Unum U.S. and 3.3% at Colonial Life.
This leading disability income writer 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. UNM banks on consistent cash flow for such capital payouts.
The Zacks Consensus Estimate for 2024 earnings is pegged at $8.24, indicating a year-over-year increase of 7.6% on 4.3% higher revenues of $13 billion. The consensus estimate for 2025 earnings is pegged at $8.71, indicating a year-over-year increase of 5.7% on 3.8% higher revenues of $13.5 billion. Unum expects 7%-9% growth in adjusted operating EPS by 2024 and 8-10% growth in the long term.
The consensus estimate for long-term earnings growth rate is pegged at 5.7%. We expect the 2026 bottom line to witness a three-year CAGR of 7.3%. UNM is poised to grow on the operational excellence of Unum U.S. and Colonial Life.
Stocks to Consider
Some better-ranked stocks from the insurance industry are Everquote Inc. EVER, Old Republic International ORI and RLI Inc. RLI, each carrying a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Everquote delivered a four-quarter average earnings surprise of 65.16%. The stock has gained 61.3% year to date. The Zacks Consensus Estimate for EVER’s 2024 and 2025 earnings indicates a year-over-year increase of 103.3% and 270%, respectively. The consensus estimate for EVER’s 2024 and 2025 earnings has moved 2 cents and 1 cent north, respectively, in the past 30 days.
Old Republic delivered a four-quarter average earnings surprise of 6.6%. The stock has gained 3.6% year to date. The Zacks Consensus Estimate for ORI’s 2024 and 2025 earnings indicates a year-over-year increase of 3.8% and 4.4%, respectively.
The Zacks Consensus Estimate for RLI’s 2024 and 2025 earnings indicates a respective 18.4% and 3.9% increase year over year. RLI delivered a four-quarter average earnings surprise of 132.39%. Shares of RLI have risen 4.4% year to date.
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