What's In Store For Unum Group (UNM) This Earnings Season?

Unum Group (NYSE:UNM) will report first-quarter 2018 results after the market closes on May 1. The company delivered a positive earnings surprise in each of the last four quarters.

Let’s see, how things are shaping up for this announcement.

Sales are likely to have increased in both Unum U.S. and Colonial Life, which in turn drove premiums higher in the first quarter. The Zacks Consensus Estimate for premium is pegged at $2.2 billion. While the consensus mark for premium in Unum U.S. stands at $1.4 billion, the same at Colonial Life is projected at $394 million.

Given prudent underwriting, solid persistency and favorable benefit ratio trends, margins are anticipated to have strengthened in core business segments.

Performance of the company’s dental product offering is expected to have improved with the rollout of the same to Unum U.S. sales force as well as the Colonial Life distribution channel.

An improving rate environment is estimated to have increased net investment income. The Consensus Estimate for the metric is pegged at $624 million.

However, volatility in Unum U.K. might have persisted due to the noise surrounding Brexit, which induced an uncertain business environment. Persistency is likely to have remained soft but an increase in force is expected to have driven premiums.

Nonetheless, lower tax incidence owing to a drop in the tax rate will possibly cushion the bottom line. Also, continued share buybacks should have boosted the metric. The Zacks Consensus Estimate is pegged at $1.25, up 22.6% year over year.

What our Quantitative Model States

Our proven model does not conclusively show that Unum Group is likely to beat on earnings this 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.

Zacks ESP: Unum Group has an Earnings ESP of -0.14%. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.

Unum Group Price and EPS Surprise

Zacks Rank: Unum Group holds a Zacks Rank #2, which increases the predictive power of ESP. However, the company needs to have a positive ESP to be confident about an earnings surprise. Therefore, this combination leaves our surprise prediction inconclusive.

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:

American Financial Group, Inc. (NYSE:AFG) is set to report first-quarter earnings on May 2 and has an Earnings ESP of +4.46%. The company is a Zacks #2 Ranked player. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Allstate Corporation (NYSE:ALL) has an Earnings ESP of +4.24% and a Zacks Rank of 3. The company is set to announce first-quarter earnings on May 1.

Cigna Corporation (NYSE:CI) has an Earnings ESP of +0.62% and a Zacks Rank #3. The company is set to announce first-quarter earnings on May 3.

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