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Sun Life Financial SLF has been gaining momentum, given its solid Asia operation, higher new business gains and asset management business, and strategic acquisitions.
The Zacks Consensus Estimate for 2021 and 2022 earnings per share is pegged at $4.70 and $5.10, indicating a respective increase of 14.6% and 8.4% from the corresponding year-ago reported figures. The expected long-term earnings growth rate is pegged at 9%.
The Zacks Consensus Estimate for 2021 and 2022 has moved 0.4% and 0.8% north, respectively, in the past 60 days, reflecting analysts’ optimism.
Earnings Surprise History
Sun Life has a decent earnings surprise history. Its bottom-line beat estimates in each of the last four quarters, the average being 12.11%.
Zacks Rank & Price Performance
Sun Life currently carries a Zacks Rank #3 (Hold). In the past year, the stock has rallied 26.7%, outperforming the industry’s increase of 8.9%.
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Return on Equity (ROE)
The company’s ROE for the trailing 12 months is 14.1%, better than the industry average of 13%. This reflects its efficiency in utilizing its shareholders’ funds.
Sun Life is well poised to gain from an expanding U.S. economy and growth in Asia, both fueled by compelling demographics as well as strong momentum in Sun Life Canada.
Business growth, higher new business gains and favorable credit experience are likely to fuel SLF Asia underlying net income. Broad-based sales growth across Asia has led to an increase in individual insurance sales.
Asia sales are expected to gain from growth in mutual fund sales in India, money market sales in the Philippines and the Hong Kong pension business.
Strong gross sales at SLC Management and higher wealth sales in Asia and Canada are expected to drive wealth sales and asset management gross flows.
Higher Individual Wealth and Group Retirement Services sales are likely to boost sales in Canada.
Sun Life targets underlying earnings per share growth of 8-10% per annum over the medium term.
Sun Life considers acquisitions a prudent approach to ramp up its growth profile. Strategic buyouts have positioned it as the second-largest dental network in the United States, consolidated its footprint in Vietnam, Indonesia and India, and expanded its wealth business in Hong Kong.
In the third quarter of 2021, Sun Life has acquired Pinnacle Care International (PinnacleCare). The addition of Pinnacle Care will consolidate Sun Life’s U.S. Stop-Loss & Health business. Its services will help the acquirer improve health outcomes, and cost management while lowering stop-loss claims of its clients.
The insurer boasts a healthy capital and cash position, reflecting its financial flexibility and opportunities for capital deployment. Its financial leverage remains below the long-term target of 25% along with excess cash of $3.2 billion.
The life insurer has increased dividend at a five-year (2016-2021) CAGR of 8.8%. and currently yields 3.4%, which betters the industry average of 3.3%, making the stock an attractive pick for yield-seeking investors.
Sun Life targets a dividend payout ratio of 40-50% over the medium term.
Stocks to Consider
Some better-ranked stocks from the insurance space include Lincoln National Corporation LNC, Athene Holding ATH and Brighthouse Financial BHF. While Lincoln National sports a Zacks Rank #1 (Strong Buy), Athene and Brighthouse carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Lincoln National delivered an earnings surprise of 31.54% in the last reported quarter.
Athene Holding delivered an earnings surprise of 48.24% in the last reported quarter.
Brighthouse Financial delivered an earnings surprise of 70.51% in the last reported quarter.
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Lincoln National Corporation (LNC): Free Stock Analysis Report
Sun Life Financial Inc. (SLF): Free Stock Analysis Report
Athene Holding Ltd. (ATH): Free Stock Analysis Report
Brighthouse Financial, Inc. (BHF): Free Stock Analysis Report
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