Shares of Unum Group UNM have gained 46% in the past six months, outperforming the industry's growth of 22%. The Finance sector and the Zacks S&P 500 index have returned 11.8% and 6.8%, respectively, in the said time frame. With a market capitalization of $13.38 billion, the average volume of shares traded in the last three months was 1.3 million. Currently priced at $73.27, the stock is slightly below its 52-week high of $77.63.
UNM Outperforms Industry, Sector, S&P in 6 Months
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The rally was driven by favorable growth estimates, strong persistency in group lines and the growth of new product lines, improved premium income, prudent capital deployment and financial flexibility.
The expected long-term earnings growth rate is 9%, which is higher than the industry average of 3.8%. This Zacks Rank #3 (Hold) insurer has a solid track record of beating earnings estimates in three of the past four quarters while missing in one, with an average surprise of 3.17%.
UNM’s Growth Projection Encourages
The Zacks Consensus Estimate for Unum Group’s 2025 earnings per share and revenues indicates an increase of 5.6% and 3.9%, respectively, from the corresponding 2024 estimates.
Optimistic Analyst Sentiment on UNM
One of the 12 analysts covering the stock has raised estimates for 2025 over the past 30 days. Thus, the Zacks Consensus Estimate for 2025 moved 0.3% north in the last 30 days.
UNM Trades Above 50-Day and 200-Day Moving Averages
This multi-line insurer is trading above its 50-day and 200-day simple moving averages (SMA) of $71.34 and $58.32, respectively, indicating solid upward momentum. SMA is a widely used technical analysis tool to predict future price trends by analyzing historical price data.
Can the Stock Retain the Momentum?
Premiums, the primary component of UNM’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 band of 4-7%.
Unum Group 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 for Unum U.S. It expects sales growth in the range of 8-12% and premium growth in the band of 2-4% for Colonial Life in 2024.
Unum Group enjoys a solid capital position and substantial statutory earnings and capital, leading to financial flexibility.
UNM has a VGM Score of B. VGM Score helps identify stocks with the most attractive value, best growth and the most promising momentum.
UNM’s Impressive Dividend History
Unum Group has consistently enhanced shareholders’ value through dividend hikes. The board has increased the shareholder dividend by 15%, effective in the third quarter of 2024, putting the dividend payout ratio right around 20%. It also marked the 15th dividend hike in the last 14 years. The dividend yield of the company was 2.3%, higher than the industry average of 1.9%, making it an attractive pick for yield-seeking investors.
Attractive Valuation
The company’s shares are trading at a price-to-book multiple of 1.22, lower than the industry average of 1.93. Before valuation expands, it is wise to take a position in the stock. This insurer has a Value Score of A, reflecting an attractive valuation.
Key Picks
Investors interested in the insurance industry may look at some better-ranked players like Palomar Holdings, Inc. PLMR, W.R. Berkley Corporation WRB and The Travelers Companies, Inc. TRV, 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.
The Zacks Consensus Estimate for W.R. Berkley’s 2025 earnings per share and revenues implies year-over-year growth of 9.6% and 7.9%, respectively. It beat earnings estimates in each of the past four quarters, with an average surprise of 7.10%. In the past six months, shares of WRB have risen 7.8%.
The Zacks Consensus Estimate for Palomar Holdings’ 2025 earnings per share and revenues implies year-over-year growth of 23.1% and 27%, respectively. It beat earnings estimates in each of the past four quarters, with an average surprise of 14.9%. In the past six months, shares of PLMR have rallied 28.5%.
The Zacks Consensus Estimate for The Travelers’ 2025 earnings per share and revenues implies year-over-year growth of 9.1% and 7.4%, respectively. It beat earnings estimates in three of the past four quarters and missed in one, with an average surprise of 25.4%. In the past six months, shares of TRV have gained 18.5%.
5 Stocks Set to Double
Each was handpicked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2024. While not all picks can be winners, previous recommendations have soared +143.0%, +175.9%, +498.3% and +673.0%.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
The Travelers Companies, Inc. (TRV) : Free Stock Analysis Report
W.R. Berkley Corporation (WRB) : Free Stock Analysis Report
Unum Group (UNM) : Free Stock Analysis Report
Palomar Holdings, Inc. (PLMR) : Free Stock Analysis Report
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
