Unum Group currently trades at $80.94 and has been a dream stock for shareholders. It’s returned 423% since July 2020, blowing past the S&P 500’s 97.3% gain. The company has also beaten the index over the past six months as its stock price is up 12.7%.
Is there a buying opportunity in Unum Group, or does it present a risk to your portfolio? Dive into our full research report to see our analyst team’s opinion, it’s free.
Why Is Unum Group Not Exciting?
We’re glad investors have benefited from the price increase, but we're cautious about Unum Group. Here are three reasons why there are better opportunities than UNM and a stock we'd rather own.
1. Net Premiums Earned Points to Soft Demand
Markets consistently prioritize net premiums earned growth over investment and fee income, recognizing its superior quality as a core indicator of the company’s underwriting success and market penetration.
Unum Group’s net premiums earned has grown at a 3.1% annualized rate over the last four years, worse than the broader insurance industry.
2. Projected Revenue Growth Is Slim
Forecasted revenues by Wall Street analysts signal a company’s potential. Predictions may not always be accurate, but accelerating growth typically boosts valuation multiples and stock prices while slowing growth does the opposite.
Over the next 12 months, sell-side analysts expect Unum Group’s revenue to rise by 2.5%, close to its 4% annualized growth for the past two years. This projection doesn't excite us and implies its newer products and services will not accelerate its top-line performance yet.
3. EPS Barely Growing
Analyzing the long-term change in earnings per share (EPS) shows whether a company's incremental sales were profitable – for example, revenue could be inflated through excessive spending on advertising and promotions.
Unum Group’s EPS grew at an unimpressive 8.5% compounded annual growth rate over the last five years. On the bright side, this performance was better than its 1.6% annualized revenue growth and tells us the company became more profitable on a per-share basis as it expanded.
Final Judgment
Unum Group isn’t a terrible business, but it isn’t one of our picks. With its shares beating the market recently, the stock trades at 1.2× forward P/B (or $80.94 per share). Beauty is in the eye of the beholder, but we don’t really see a big opportunity at the moment. We're fairly confident there are better stocks to buy right now. We’d recommend looking at the Amazon and PayPal of Latin America.
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