Unum Group currently trades at $96.56 and has been a dream stock for shareholders. It’s returned 268% since September 2021, blowing past the S&P 500’s 69.5% gain. The company has also beaten the index over the past six months as its stock price is up 31.6%.
Is now the time to buy Unum Group, or should you be careful about including it in your portfolio? Get the full breakdown from our expert analysts, it’s free.
Why Do We Think Unum Group Will Underperform?
We’re happy investors have made money, but we’re sitting this one out for now. Here are two reasons why UNM doesn’t excite us, plus one stock we’d rather own.
1. Net Premiums Earned Point to Soft Demand
Insurers sell policies then use reinsurance (insurance for insurance companies) to protect themselves from large losses. Net premiums earned are therefore what's collected from selling policies less what’s paid to reinsurers as a risk mitigation tool.
Unum Group’s net premiums earned has grown at a 3.2% annualized rate over the last five years, worse than the broader insurance industry.
2. Recent EPS Growth Below Our Standards
While long-term earnings trends give us the big picture, we also track EPS over a shorter period because it can provide insight into an emerging theme or development for the business.
Unum Group’s EPS grew at a weak 1.9% compounded annual growth rate over the last two years. On the bright side, this performance was higher than its 1.3% annualized revenue declines and tells us management adapted its cost structure in response to a challenging demand environment.
Final Judgment
We see the value of companies helping consumers, but in the case of Unum Group, we’re out. With its shares outperforming the market lately, the stock trades at 1.3× forward P/B (or $96.56 per share). This multiple tells us a lot of good news is priced in - we think other companies feature superior fundamentals at the moment. We’d recommend looking at an all-weather company that owns household favorite Taco Bell.
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