A Steady Climb
Unum Group, better known by its ticker symbol UNM, has been a standout in the financial world, with its shares soaring 16.5% so far this year. This growth significantly outpaces the industry, the finance sector, and the Zacks S&P 500 composite. Boasting a market capitalization of $10.1 billion and an average trading volume of 1.5 million shares over the last three months, Unum Group stands tall among its peers.
A Strong Foundation
Key drivers behind Unum’s success include disciplined sales trends, robust persistency, an improving rate environment, favorable risk experience, and a sturdy capital base. As a Zacks Rank #2 (Buy) company, Unum has outperformed the industry average, with a 9% increase in earnings over the past five years and a commendable four-quarter average earnings surprise of 5.19%.
Driving Growth
With an estimated adjusted operating return on equity (ROE) projected to range between 12% and 14% by 2024, Unum has positioned itself for continued growth. The company’s return on invested capital (ROIC) has been on an upward trajectory, hitting 9.3% in the trailing 12 months, surpassing the industry standard of 8.2%.
The Road Ahead
Looking forward, Unum Group’s positive momentum is expected to continue. Analysts project a 6.8% year-over-year increase in 2024 earnings, with revenues set to rise by 4.2%. The company anticipates a 7%-9% growth in adjusted operating EPS by 2024, setting the stage for further expansion in the long term.
Building on Strength
Unum’s growth is underpinned by its two major operating segments—Unum U.S. and Colonial Life. These segments are expected to drive sales and premium growth, with Unum U.S. predicted to see sales and premium growth of 5-10% and 5-7% in 2024, respectively. Colonial Life, on the other hand, foresees growth in sales, premium, and adjusted operating ROE in 2024, paving the path for sustained success.
Capitalizing on Success
Capitalizing on its robust performance, Unum Group is well-positioned with a solid capital base. The company’s financial flexibility, supported by strong statutory earnings, offers a solid foundation for future dividend capacity. Notably, Unum has increased dividends 13 times in the past 12 years and plans to repurchase $500 million worth of shares in 2024, while aiming to boost dividends by 10%-15% annually over the next five years.
Valuable Investment
Trading at a price-to-book value below the industry average and scoring an A on the Value Score, Unum Group presents an attractive investment opportunity. Back-tested results have shown that stocks with a Value Score of A or B, coupled with a Zacks Rank #1 or 2, offer promising returns for investors seeking long-term value.
Exploring Opportunities
As investors consider potential opportunities, other top-ranked stocks in the insurance sector such as Axis Capital Holdings, The Mercury General, and Palomar Holdings, are also worth exploring. These companies, each heralding a Zacks Rank #1 status, offer additional avenues for investors seeking a diversified portfolio in the insurance industry.
