Unum Group UNM will report second-quarter 2018 results after the market closes on Jul 30. Last reported quarter, the company came up with a negative earnings surprise of 0.80%.
Let’s see, how things are shaping up for this announcement.
Strategic investments made to ramp up growth in core business is already showing results. To that end, the acquisition of dental businesses in the United States and the U.K. is expected to have continued to drive results in the second quarter.
Banking on prudent underwriting, solid persistency and favorable benefit ratio trends, margins are anticipated to have strengthened in core business segments.
Given a compelling product portfolio and a solid execution, sales and persistency have likely increased in Unum U.S. in the second quarter, driving premiums for the segment. This in turn, should have boosted overall premiums. The Zacks Consensus Estimate for premiums is pegged at $2.3 billion.
Solid voluntary benefits in dental and vision lines have possibly cushioned sales at Unum U.S. Colonial Life segment is estimated to have consistently benefited from an improved persistency as well as sales.
Net investment income is expected to have improved, banking on a rising interest rate. The Consensus Estimate for the metric is pegged at $617 million.
However, volatility in Unum U.K. might have persisted due to the noise surrounding Brexit, which induced an uncertain business environment. Management expects a still low interest rate environment and the tightening of credit spreads to weigh on earnings and reserve levels at Closed Block and Corporate segment.
Nonetheless, lower tax incidence owing to a drop in the tax rate and share buybacks should have boosted the company’s bottom line. The Zacks Consensus Estimate is pegged at $1.27, up 20.9% year over year.
Unum Group Price and EPS Surprise
What Our Quantitative Model States
Our proven model does not conclusively show that Unum Group is likely to beat on earnings this to-be-reported quarter. This is because a stock needs to have both a positive Earnings ESP and a favorable Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. But that is not the case here as you will see below.
Earnings ESP: Unum Group has an Earnings ESP of 0.00% as both the Zacks Consensus Estimate and the Most Accurate Estimate are pegged at $1.27. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.
Zacks Rank: Unum Group carries a Zacks Rank #3, which increases the predictive power of ESP. However, the company’s 0.00% ESP makes surprise prediction difficult.
We caution against Sell-rated stocks (#4 or 5) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks to Consider
Some stocks worth considering from the insurance industry with the right combination of elements to exceed estimates this time around are as follows:
Athene Holding Ltd. ATH is set to report second-quarter earnings on Aug 2 and has an Earnings ESP of +1.12%. The company is a Zacks #2 Ranked player. You can see the complete list of today’s Zacks #1 Rank stocks here.
Brighthouse Financial, Inc. BHF has an Earnings ESP of +0.94% and a Zacks Rank of 3. The company is set to announce second-quarter earnings on Aug 6.
Prudential Financial, Inc. PRU has an Earnings ESP of +0.06% and a Zacks Rank #2. The company is set to announce second-quarter earnings on Aug 1.
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