Headquartered in Toronto, Canada, Sun Life Financial Inc. (SLF - Get Rating) is a financial services company that provides insurance, wealth, and asset management solutions to individuals and corporate clients worldwide.

It offers term and permanent life, personal health, dental, critical illness, long-term care, and disability insurance products. 

The company also provides reinsurance products, investment counseling and portfolio management services, mutual funds and segregated funds, trust and banking services, real estate property brokerage and appraisal services, and merchant banking services.

SLF’s four-year average dividend yield is 3.7%, and its current dividend translates to a 4.3% yield. It has declared a $0.69 per share quarterly dividend, which will be paid on June 30, 2022.

SLF’s revenue, underlying net income, and EPS decreased year-over-year in the last reported quarter.

Moreover, its underlying ROE came in at 14%, declining from 15.3% in the year-ago period. 

The company’s poor quarterly results led to its shares declining 11.3% in price year-to-date and 7.2% over the past year to close the last trading session at $49.40.

It is currently trading 15.5% below its 52-week high of $58.49, which it hit on February 9, 2022.

Here’s what could influence SLF’s performance in the upcoming months:

Disappointing Financials

SLF’s total revenue declined 74.9% year-over-year to C$380 million ($301.25 million) for the first quarter ended March 31, 2022. 

The company’s net income declined 8.4% year-over-year to C$858 million ($680.19 million). Also, its EPS came in at C$1.44, compared to C$1.45 in the year-ago period.

Mixed Analyst Estimates

Analysts expect SLF’s EPS for the quarter ending June 30, 2022, to decline 2.5% year-over-year to $1.16. Its revenues for fiscal 2022 and 2023 are expected to increase 6.9% and 4%, respectively.

 It surpassed Street EPS estimates in each of the trailing four quarters.

Mixed Valuation

In terms of forward EV/S, SLF’s 1.14x is 59.6% lower than the 2.82x industry average. Likewise, its 9.75x forward EV/EBIT is 11% lower than the 10.96x industry average. 

However, the stock’s 1.48x forward P/B is 30.8% higher than the 1.13x industry average. Also, its 10.48x trailing-12-month non-GAAP P/E is 2.4% higher than the 10.23x industry average.

Mixed Profitability

SLF’s trailing-12-month gross profit margin and net profit margin of 41.48% and 11.43% are lower than the 64.46% and 29.09% industry average, respectively. 

Likewise, its 1.20% trailing-12-month ROA is 4.5% lower than the 1.25% industry average. 

Furthermore, the stock’s trailing-12-month asset turnover ratio of 0.11% is lower than the industry average of 0.21%. 

In addition, its trailing-12-month ROCE and Return on Total Capital of 15.80% and 9.57% are 25.9% and 58% higher than the industry averages of 12.55% and 6.05%, respectively.

POWR Ratings Reflect Uncertainty

SLF has an overall rating of C, equating to a Neutral in our POWR Ratings system. 

The POWR Ratings are calculated by taking into account 118 different factors, with each factor weighted to an optimal degree.

Our proprietary rating system also evaluates each stock based on eight different categories. SLF has a C grade for Value, in sync with its mixed valuation.

It has a C grade for Quality, consistent with its mixed profitability. In addition, the decline in its revenue and earnings justifies the D grade for Growth.

SLF is ranked #23 out of 55 stocks in the Insurance – Property & Casualty industry. Click here to access SLF’s Momentum, Stability, and Sentiment ratings.

SLF shares closed at $47.88 on Friday, down $-1.52 (-3.08%). Year-to-date, SLF has declined -12.20%, versus a -17.67% rise in the benchmark S&P 500 index during the same period.

About the Author: Dipanjan Banchur

Since he was in grade school, Dipanjan was interested in the stock market. This led to him obtaining a master’s degree in Finance and Accounting. Currently, as an investment analyst and financial journalist, Dipanjan has a strong interest in reading and analyzing emerging trends in financial markets. More...

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