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Here's Why Investors May Bet on Sun Life Financial (SLF) Stock

Sun Life Financial Inc. SLF has been gaining momentum on the back of a focus on Asia operations, growing asset management businesses and a strong financial position.

Earnings Surprise History

Sun Life has a decent track record of beating the Zacks Consensus Estimate for earnings in the last four quarters, the average being 9.14%.

Zacks Rank & Price Performance

Sun Life currently carries a Zacks Rank #2 (Buy). In the past year, the stock has lost 17.8% compared with the industry’s decrease of 15.2%.

Zacks Investment Research
Zacks Investment Research


Image Source: Zacks Investment Research

Northbound Estimate Revision

The Zacks Consensus Estimate for Sun Life’s 2023 earnings has moved up 2.1% in the past 60 days, reflecting analysts’ optimism.

Optimistic Growth Projections

The Zacks Consensus Estimate for Sun Life’s 2024 earnings is pegged at $5.14 per share, suggesting growth of 8.1% year over year. The expected long-term earnings growth rate is pegged at 9%.

Business Tailwinds

Sun Life stays focused on continually strengthening its presence in China, Philippines, India, Hong Kong, Indonesia, Malaysia and Vietnam. The Asian market provides higher returns and growth than the North American markets.

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 intends to invest an additional $20 billion over a span of five years across its general account and third-party investments. This is in addition to the $60 billion of existing sustainable investments.

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.

Sun Life boasts a strong capital position. It targets a leverage ratio of 25% over the long term. Given the insurer’s ongoing shift to fee-based capital-light businesses, it reiterates medium-term ROE objectives of 18% from 16% guided earnings.

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 from the life insurance industry are Brighthouse Financial BHF, Primerica Inc. PRI and Voya Financial Inc. VOYA.

Brighthouse Financial’s earnings surpassed estimates in three of the last four quarters and missed in one, the average being 2.07%. In the past year, BHF has lost 16.6%.

The Zacks Consensus Estimate for BHF’s 2023 and 2024 earnings indicates a respective year-over-year increase of 33.5% and 11.5%. The insurer sports a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Primerica’s earnings surpassed estimates in two of the last four reported quarters while missing in the other two. In the past year, PRI has gained 22.6%.

The Zacks Consensus Estimate for PRI’s 2023 and 2024 earnings indicates a respective year-over-year increase of 29.4% and 11.5%. Currently, the insurer flaunts a Zacks Rank #1.

VOYA has a decent track record of beating earnings estimates in the last four reported quarters, the average beat being 38.68%. In the past year, VOYA has gained 5.7%.

The Zacks Consensus Estimate for VOYA’s 2023 and 2024 earnings indicates a respective year-over-year increase of 7.3% and 13%. The insurer carries a Zacks Rank #2 at present.

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Primerica, Inc. (PRI) : Free Stock Analysis Report

Sun Life Financial Inc. (SLF) : Free Stock Analysis Report

Voya Financial, Inc. (VOYA) : Free Stock Analysis Report

Brighthouse Financial, Inc. (BHF) : Free Stock Analysis Report

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