Yahoo Finance Here's Why Hold Strategy is Apt for Sun Life (SLF) Stock
Sun Life Financial Inc.’s SLF focus on Asia operation, growing asset management businesses and strong financial position makes it worth retaining in one’s portfolio.
Earnings Surprise History
Sun Life has a decent track record of beating the Zacks Consensus Estimate for earnings in the last trailing four quarters, the average being 9.63%.
Zacks Rank & Price Performance
Sun Life currently caries a Zacks Rank #3 (Hold). Year to date, the stock has gained 8.9%, outperforming the industry’s growth of 4.4%.
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Northbound Estimate Revision
The Zacks Consensus Estimate for Sun Life’s 2023 and 2024 earnings has moved up 0.2% and 0.3%, respectively, in the past 30 days, reflecting analysts’ optimism.
Optimistic Growth Projections
The Zacks Consensus Estimate for Sun Life’s 2024 earnings is pegged at $5.07 per share, suggesting growth of 6.7% year over year. The expected long-term earnings growth rate is pegged at 8%.
Business Tailwinds
Sun Life remains well-poised for growth, riding on premier asset management franchises at MFS and SLC Management as well as leading wealth and insurance market positions in Canada. Also, the shift toward more capital-light businesses in the United States as well as an established presence in attractive markets in Asia should benefit the insurer in the long run.
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.
The Canada business is likely to gain from business growth, higher new business gains and experience-related items. Higher individual participating life insurance sales and higher large case group benefits sales in Sun Life Health should benefit Insurance sales.
The life insurer is improving its business mix and thus shifting its growth focus toward products that park lower capital and offer more predictable earnings, such as mutual funds and group benefits. Eyeing a place among the top five players, the company is also growing its voluntary benefits business.
Sun Life Investment Management fosters its investment capabilities in private fixed income, mortgages and real estate by investing in pension plans and other institutional investors. This development further strengthens the company’s Asset Management pillar, which provides a higher return on equity (ROE), lower capital and lower volatility and has the potential for an earnings upside.
The company’s capital position remains strong, with Sun Life Assurance’s Minimum Continuing Capital and Surplus Requirements ratio of 148% at first-quarter end. Its capital and cash positions remain healthy and along with a low leverage ratio provide flexibility and opportunity for further capital deployment. Sun Life targets minimum cash and other liquid assets at the holding company of $500 million.
Sun Life targets dividend payout ratio in the range of 40-50%. The life insurer also repurchases shares, reflecting its strong cash and capital generation in its businesses. SLF remains focused on improving ROE and retention of flexibility for future growth opportunities.
Stocks to Consider
Some better-ranked stocks from the life insurance industry are Reinsurance Group of America, Incorporated RGA, Kinsale Capital Group, Inc. KNSL and Axis Capital Holdings Limited AXS. While Reinsurance Group sports a Zacks Rank #1 (Strong Buy), Kinsale Capital and Axis Capital carry a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Reinsurance Group’s 2023 and 2024 earnings per share is pegged at $17.74 and $17.99, indicating a year-over-year increase of 22.9% and 1.4%, respectively.
Reinsurance Group has a solid track record of beating earnings estimates in three of the last four quarters and missing in one, the average being 56.92%. In the past year, RGA has gained 13.8%.
Kinsale Capital has a solid track record of beating earnings estimates in each of the last trailing four quarters, the average being 14.77%. In the past year, KNSL has gained 53.1%.
The Zacks Consensus Estimate for KNSL’s 2023 and 2024 earnings per share is pegged at $10.37 and $12.41, indicating a year-over-year increase of 32.9% and 19.6%, respectively.
RLI Corp.’s earnings surpassed estimates in each of the last trailing four quarters, the average earnings surprise being 43.50%. In the past year, RLI Corp. has gained 10.5%.
The Zacks Consensus Estimate for RLI’s 2023 and 2024 earnings has moved 2.9% and 0.2% north, respectively, in the past 30 days.
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Axis Capital Holdings Limited (AXS) : Free Stock Analysis Report
Reinsurance Group of America, Incorporated (RGA) : Free Stock Analysis Report
Sun Life Financial Inc. (SLF) : Free Stock Analysis Report
Kinsale Capital Group, Inc. (KNSL) : Free Stock Analysis Report
