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StanCorp Financial: A Strong Buy - Analyst Blog

Posted: 7/8/2013 12:54:00 PM
Referenced Stocks: AMP;LFC;SFG;SYA

On Jul 5, Zacks Investment Research upgraded StanCorp Financial Group Inc . ( SFG ) to a Zacks Rank #1 (Strong Buy).

Why the Upgrade?

StanCorp Financial delivered positive earnings surprises in the last 4 quarters with an average beat of 21.1%. The long-term earnings growth of the company is presently pegged at 7%.

The company continues to work on pricing actions to mitigate the higher group long-term disability claims incidence and a continued low interest rate environment.

StanCorp's investment portfolio continues to perform well with no considerable exposure to high-risk asset classes.

StanCorp enjoys a strong capital position, enabling it to remain focused on enhancing shareholder value. StanCorp envisions buybacks between $40 million and $80 million in 2013.  Additionally, its dividend yield stands at 1.82%, well above the industry average of 1.51%.

The last reported quarter benefited from lower operating expenses and management expects it to decline through 2013.

We expect the life insurer to surpass expectations when it reports its second-quarter results on Jul 23.  This is because it has a right combination of a positive Earnings ESP (Read: Zacks Earnings ESP: A Better Method ) and Zacks Rank #1 (Strong Buy). ESP or Expected Surprise Prediction, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, is at +2.0%.

Additionally, for the second quarter, the Zacks Consensus Estimate is pegged at $1.00 per share, up 96.6% year over year. The Zacks Consensus Estimate for 2013 increased 1% to $3.97 per share over the last 60 days, reflecting a year-over-year increase of 22.6%. The same for 2014 is pegged at $4.30, increasing 0.7% over the same time frame and translating to a year-over-year improvement of 8.3%.

Other Stocks to Consider

Apart from StanCorp Financial, Symetra Financial Corporation ( SYA ) with a Zacks Rank #1 (Strong Buy), China Life Insurance Co. Ltd . ( LFC ) and Ameriprise Financial Inc . ( AMP ), both with Zacks Rank #2 (Buy) are also worth considering.

AMERIPRISE FINL (AMP): Free Stock Analysis Report

CHINA LIFE INS (LFC): Free Stock Analysis Report

STANCORP FNL CP (SFG): Free Stock Analysis Report

SYMETRA FINL CP (SYA): Free Stock Analysis Report

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Zacks Investment Research