Unum Group (UNM) Q3 Earnings: Is A Beat In The Cards?

We expect accident & health insurer Unum Group (NYSE:UNM) to beat expectations when it reports third-quarter results on Oct 26, after the market closes.

Why a Likely Positive Surprise?

Our proven model shows that Unum Group has the right combination of two key ingredients to beat estimates this quarter.

Zacks ESP: Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is +1.05%. This is because the Most Accurate estimate of $0.96 is pegged higher than the Zacks Consensus Estimate of $0.95. The positive ESP is a meaningful and leading indicator of a likely earnings beat.

Zacks Rank: Unum Group carries a Zacks Rank #3 (Hold). Note that stocks with a Zacks Rank of #1 (Strong Buy), 2 (Buy) or 3 have a significantly higher chance of beating on earnings. The combination of Unum Group’s Zacks Rank #3 and +1.05% Earnings ESP makes us reasonably confident of an earnings beat. You can see the complete list of today’s Zacks #1 Rank stocks here.

Conversely, the Sell-rated stocks (Zacks Rank #4 and 5) should never be considered going into an earnings announcement.

What is Driving the Better-Than-Expected Earnings?

Unum Group is likely to deliver operating earnings growth in the to-be-reported quarter. Strong performance at Unum U.S. and Colonial Life are expected to have been the main growth drivers.

Moreover, the company is anticipated to report improved premium income at Unum U.S., and Colonial Life in the third quarter.

In addition, Unum Group is likely to witness top-line growth in the third quarter, owing to solid premium improvement, stable benefits experience and cost control.

Also, continued share buyback should boost the bottom line.

However, the company might witness a decline in net investment income due to the low interest rate environment. Moreover, the lower exchange rate might have weighed on the results at Unum U.K.

With respect to the surprise trend, the company delivered positive surprises in three of the last four quarters, with an average beat of 3.54%.

Stocks to Consider

Here are some companies from the insurance industry that you may want to consider as these have the right combination of elements to post an earnings beat this quarter:

CNA Financial Corporation (NYSE:CNA) has an Earnings ESP of +2.38% and a Zacks Rank #2. The company is slated to report third-quarter earnings on Oct 31.

RenaissanceRe Holdings Ltd. (NYSE:RNR) has an Earnings ESP of +3.59% and a Zacks Rank #3. The company is set to report third-quarter earnings on Nov 1.

The Allstate Corporation (NYSE:ALL) has an Earnings ESP of +1.61% and a Zacks Rank #3. The company is slated to report third-quarter earnings on Nov 2.

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