Sun Life Financial Inc. SLF is well-poised for growth, driven by mutual fund sales, Hong Kong pension business, business growth, higher new business gains and solid capital position.
The Zacks Consensus Estimate for 2023 earnings per share is pegged at $4.54, indicating a year-over-year increase of 2.7%. The expected long-term earnings growth rate is pegged at 9%.
Earnings Surprise History
Sun Life has a solid track record of beating earnings estimates in six of the last seven quarters.
Zacks Rank & Price Performance
Sun Life currently carries a Zacks Rank #3 (Hold). In the past year, the stock has lost 15.6% compared with the industry’s decline of 13.2%. Its focus on the expansion of its Asia business and global asset management business, favorable business mix, strategic acquisitions and solid capital position should help the stock bounce back.
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Sun Life remains well-poised for growth in 2022, 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.
Sun Life considers acquisitions a prudent approach to ramp up its growth profile. In September 2022, SLF agreed to acquire a 51% interest in Advisors Asset Management, Inc. (AAM) for $214 million, subject to customary adjustments with a put/call option to acquire the remaining 49% at the beginning of 2028. The buyout is expected to enable SLF to extend its top-notch alternative investment capabilities to new clients and bolster the list of investment solutions that AAM can offer to the U.S. financial advisor market. The deal will also enable SLC Management as well as its affiliated investment managers to provide their investment strategies to the U.S. HNW market.
The insurer’s 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 has increased its dividend at an eight-year (2015-2022) CAGR of 4.7%. The life insurer targets an underlying dividend payout ratio between 40% and 50%, based on underlying earnings per share. SLF remains focused on improving return on equity and retaining flexibility for future growth opportunities.
Stocks to Consider
Some better-ranked stocks in the insurance industry are Reinsurance Group of America, Incorporated RGA, W.R. Berkley Corporation WRB and Root, Inc. ROOT, each carrying 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 Reinsurance Group’s 2022 and 2023 earnings has moved 4.7% and 0.4% north, respectively, in the past 30 days. In the past year, Reinsurance Group stock has gained 30.2%.
The Zacks Consensus Estimate for RGA’s 2022 and 2023 earnings per share indicates a year-over-year increase of 1,224.7% and 3.4%, respectively.
The bottom line of W.R. Berkley surpassed earnings estimates in each of the last four quarters, the average beat being 25.63%. In the past year, the insurer has gained 36.5%.
The Zacks Consensus Estimate for W.R. Berkley’s 2022 and 2023 earnings implies a respective year-over-year rise of 26.2% and 11.5%.
Root delivered a trailing four-quarter average earnings surprise of 22.44%. In the past year, ROOT has lost 92.3%.
The Zacks Consensus Estimate for ROOT’s 2022 and 2023 earnings indicates a respective year-over-year increase of 44.7% and 23.9%.
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