Sun Life Financial Inc.. (SLF – Free Report) is poised to experience growth in an attractive Asian business, a growing global asset management business and a favorable business mix. A strong balance sheet and favorable growth estimates make Sun Life stocks worth keeping in its portfolio.
This third-largest insurer in Canada has a strong track record of exceeding earnings estimates over the past nine quarters, averaging 11.85%.
Zacks Ranking and Price Performance
Sun Life currently holds a Rank 3 of Zacks (pending). In one year, the title gained 16% against a decline of 6.9% of the industry.
Image source: Zacks Investment Research
Zacks’ consensus estimate for 2022 is set at $ 5.16, which indicates an 8.8% increase from the figure released a year ago.
Sun Life is targeting net income growth of 8-10% per year over the medium term. The expected long-term earnings growth rate is currently set at 9%.
Return on equity (ROE)
ROE for the past 12 months is 14.1%, comparing favorably to 11.4% in the industry and reflecting the effectiveness of SLFs in using shareholder funds. Based on the current shift to fee-based, small-cap businesses, Sun Life has raised its medium-term ROE targets to 16%, from 12% to the 14% expected earlier.
Sun Life has a favorable VGM score of B. This style score assesses stocks according to their combined weighted styles, helping to identify those with the most attractive value, the best growth and the best momentum.
Business tail winds
With a leading position in individual insurance, group benefits and group retirement services in the Canadian market, Sun Life spares no effort to capitalize on growth opportunities in Canada.
Sun Life has strengthened its presence in China, the Philippines, India, Hong Kong, Indonesia, Malaysia, Singapore and Vietnam to expand into the largest and most dynamic markets in Asia.
Sun Life Investment Management’s continued efforts to accelerate private fixed income, mortgage and real estate investment capabilities by investing in pension plans and institutional investors ensure the expansion of the management business of Sun Life. heritage and assets.
Sunlife continues to focus on building scale and capacity through mergers and acquisitions and strategic partnerships. Strategic acquisitions have positioned it as the second largest dental network in the United States, consolidated its presence in Vietnam, Indonesia and India and extended its wealth activity in Hong Kong, and strengthened its real estate capacities.
Sun Life is shifting its growth toward products that require less capital and offer more predictable earnings in order to improve the mix of businesses.
Focusing on operational excellence, Sun Life is increasing its dividends and engaging in share buybacks in addition to pursuing hospitality initiatives, reflecting an efficient use of capital. Its current dividend yield of 3.8% is better than the industry average of 3.7%. Sun Life is targeting a dividend payout ratio of around 40-50% over the medium term. It generated a total shareholder return of 13% over five years.
A healthy capital and cash position as well as a low debt ratio provide flexibility and an opportunity for further deployment of capital. Sun Life is aiming for a leverage of 25 over the long term.
Actions to consider
Some top-ranked stocks in the insurance space include Branded financial services (ROOM – Free report), Brighthouse Financial (BHF – Free report), and Berkshire Hathaway (BRK.B – Free report).
Zacks’ consensus estimate for Hallmark Financial’s earnings in 2022 is 40 cents, up 60% from the figure released a year ago. Hallmark Financial, ranked first in Zacks, posted a surprise four-quarter average earnings of 53.62%. You can see The full list of today’s Zacks # 1 Rank stocks here.
Brighthouse Financial holds a Zacks Rank # 2. Zacks’ consensus estimate for 2022 has risen 3.8% in the past seven days. Brighthouse delivered a surprise four-quarter average profit of 67.61%.
Berkshire wears a Zacks Rank # 2 (Buy). Zacks’ consensus estimate for 2022 earnings has risen 0.8% in the past 60 days. The expected long-term earnings growth rate is set at 7%. Berkshire posted a surprise four-quarter average earnings of 5.53%.
Shares of Hallmark Financial, Brighthouse Financial and Berkshire have gained 33.5%, 38% and 33.1% in one year.