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Shares of Unum Group UNM have gained 68.9% year to date, outperforming the industry's rise of 42.6%. The Finance sector and the Zacks S&P 500 index have returned 24.6% and 26.7% in the said time frame, respectively. With a market capitalization of $13.94 billion, the average volume of shares traded in the last three months was 1.3 million. Currently priced at $76.35, the stock is slightly below its 52-week high of $77.63.
UNM Outperforms Industry, Sector, S&P
Image Source: Zacks Investment Research
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 a solid capital position.
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 2024 earnings per share indicates a year-over-year increase of 11.3%. The consensus estimate for revenues is pegged at $12.95 billion, implying a year-over-year improvement of 4.2%.
The consensus estimate for 2025 earnings per share and revenues indicates an increase of 5.5% and 3.9%, respectively, from the corresponding 2024 estimates.
Optimistic Analyst Sentiment on UNM
Three of the 13 analysts covering the stock have raised estimates for 2024, and four analysts have raised the same for 2025 over the past 30 days. Thus, the Zacks Consensus Estimate for 2024 and 2025 moved 0.1% and 0.7% north, respectively, in the last 30 days.
UNM Trading Above 50-Day and 200-Day Moving Average
This multi-line insurer is trading above its 50-day and 200-day simple moving average (SMA) of $65.47 and $55.64, respectively, indicating solid upward momentum. SMA is a widely used technical analysis tool to predict future price trends by analyzing historical price data.
Will the Bull Run Continue?
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%.
UNM 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.