Unum Group UNM shares are trading at a discount compared to the Zacks Accident and Health Insurance industry. Its forward price-to-book value of 1.32X is lower than the industry average of 1.89X, the Finance sector’s 4.1X and the Zacks S&P 500 Composite’s 8.2X. The property and casualty insurer has a Value Score of A.

The insurer has a market capitalization of $14.04 billion. The average volume of shares traded in the last three months was 1.3 million. The insurer has a solid track record of beating earnings estimates in three of the last four quarters while missing in one, the average being 2.94%.

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Shares of The Travelers Companies, Inc. TRV and Cincinnati Financial Corporation CINF are trading at a multiple higher than the industry average, while Axis Capital Holdings Limited AXS shares are trading at a discount.

UNM is an Outperformer

Shares of Unum Group have gained 8.8% in the year-to-date period, outperforming its industry and the Finance sector growth of 4.7% and 3.5%, respectively, and against the Zacks S&P 500 composite’s decline 0.9%.

UNM Outperforms Industry, Sector, S&P YTD

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UNM Trading Above 50-Day and 200-Day Moving Averages

Shares of Unum Group closed at $79.46 on Thursday, near its 52-week high of $83.96. This proximity underscores investor confidence. It has the ingredients for further price appreciation. The stock is trading above the 50-day and 200-day simple moving averages (SMA) of $75.22 and $63.06, respectively, indicating solid upward momentum. SMA is a widely used technical analysis tool to predict future price trends by analyzing historical price data.

UNM’s Growth Projection Encourages

The Zacks Consensus Estimate for Unum Group’s 2025 revenues is pegged at $13.44 billion, implying a year-over-year improvement of 4.3%. 

The consensus estimate for 2026 earnings per share and revenues indicates an increase of 8.7% and 4.2%, respectively, from the corresponding 2024 estimates. 

Earnings have grown 12.9% in the past five years, better than the industry average of 3.6%. 

Factors Acting in Favor of UNM

Premiums, the primary component of UNM’s top line, continue to gain from its healthy in-force block growth and higher sales. In 2025, Unum Group expects sales growth in the range of 5-10%, premium growth in the band of 4-7% and adjusted operating return on equity (ROE) between 21% and 23% from core business. Unum Group estimates 8-12% growth in adjusted operating EPS in 2025. For the long term, Unum Group expects sales growth in the range of 8-12%, premium growth in the band of 4-7% and adjusted operating earnings per share growth between 8% and 12%. 

Unum Group 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 3.6%, as well as adjusted operating ROE in the range of 23-25% in 2025, for Unum U.S. It expects sales growth in the range of 5-10%, premium growth in the range of 2-4% and adjusted operating ROE in the range of 18-20% for Colonial Life in 2025.

Unum Group enjoys a solid capital position and substantial statutory earnings and capital, leading to financial flexibility.

UNM’s Impressive Dividend History

Unum Group has consistently enhanced shareholders’ value through dividend hikes. The board has increased the shareholder dividend by 15%, effective in the third quarter of 2024, putting the dividend payout ratio right around 20%. It also marked the 15th dividend hike in the last 14 years. The dividend yield of the company was 2.1%, making it an attractive pick for yield-seeking investors.

Conclusion

Favorable sales trends and risk experience, strong persistency, an improving rate environment, solid capital position, higher return on capital and effective capital deployment should continue to favor UNM over the long term. The insurer should continue to gain from favorable growth estimates as well as the affordability of the stock. It is, therefore, wise to hold on to this Zacks Rank #3 (Hold) stock. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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The Travelers Companies, Inc. (TRV) : Free Stock Analysis Report

Cincinnati Financial Corporation (CINF) : Free Stock Analysis Report

Axis Capital Holdings Limited (AXS) : Free Stock Analysis Report

Unum Group (UNM) : Free Stock Analysis Report

This article originally published on Zacks Investment Research (zacks.com).

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