Unum Group UNM shares are trading at a discount to the Zacks Accident and Health Insurance industry. Its forward price-to-book value of 1.07X is lower than the industry average of 1.94X, the Finance sector’s 3.62X and the Zacks S&P 500 composite’s 8.62X. It has a Value Score of A.

The company has a market capitalization of $11.22 billion. The average volume of shares traded in the last three months was 1.2 million.

Image Source: Zacks Investment Research

The stock remains attractively valued compared with Trupanion, Inc. TRUP, Aflac Incorporated AFL and Amerisafe, Inc. AMSF.

Shares of UNM have gained 33.6% in the year-to-date period compared with the industry’s growth of 34.1%. The stock has outperformed the Zacks S&P 500 composite’s growth of 19.5%.

YTD Price Performance

Image Source: Zacks Investment Research

Shares of UNM closed at $60.42 on Tuesday, near its 52-week high of $61.72. This proximity underscores investor confidence. It has the ingredients for further price appreciation.

UNM Trading Above 50-Day and 200-day Moving Average

The stock is trading above its 50-day and 200-day simple moving average (SMA) of $55.77 and $51.70, 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 Encouraging Growth Projection

The Zacks Consensus Estimate for Unum Group’s 2024 earnings per share indicates a year-over-year increase of 10.7%. The consensus estimate for revenues is pegged at $12.97 billion, implying a year-over-year improvement of 4.4%. The consensus estimate for 2025 earnings per share and revenues indicates an increase of 5% and 3.6%, respectively, from the corresponding 2024 estimates.

Earnings of UNM grew 9% in the last five years, better than the industry average of 3.8%. The accident and health insurer has a solid surprise history. It surpassed earnings estimates in three of the last four quarters and missed in one, the average beat being 2.96%.

Factors Benefiting UNM

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 at Unum U.S. It expects sales growth in the range of 8-12% and premium growth in the band of 2-4% at Colonial Life for 2024.

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, and that places 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 2.7%, higher than the industry average of 1.9%, 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.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

Aflac Incorporated (AFL) : Free Stock Analysis Report

Unum Group (UNM) : Free Stock Analysis Report

AMERISAFE, Inc. (AMSF) : Free Stock Analysis Report

Trupanion, Inc. (TRUP) : Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research