Unum GroupUNM is set to report fourth-quarter 2016 results on Feb 1, after the market closes . Last quarter, the company posted a positive earnings surprise of 4.21%. Let's see how things are shaping up for this announcement.
Factors to be Considered this Quarter
Unum Group is likely to report operating income growth in the fourth quarter, primarily due to an increase in premiums at Unum US and Colonial Life businesses. Also, sustained favorable benefits experience should have driven growth for the insurer.
Moreover, the company has likely witnessed top-line improvement and solid profit margins owing to disciplined pricing and underwriting principles in new businesses. In fact, all aspects of the company's business are expected to have improved in the quarter.
Also, Unum Group had projected a decline of about $5.5 million in interest expenses in the fourth quarter, due to debt maturity.
Further, the company is expected to see higher volume of sales at Colonial Life and Unum UK in the to-be-reported quarter.
However, the company's operating income at Unum UK are anticipated to have declined in the quarter.
With respect to the surprise trend, the company delivered positive surprises in all of the last four quarters, with an average beat of 4.59%.
Unum Group Price and EPS Surprise
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 Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here as you will see below.
Zacks ESP : Unum Group has an Earnings ESP of 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate stand at 98 cents. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter .
Zacks Rank : Unum Group holds a Zacks Rank #2. Though a favorable Zacks Rank increases the predictive power of ESP, we need a positive ESP to be confident about an earnings beat.
We caution against Sell-rated stocks (Zacks Rank #4 or 5) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
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:
Validus Holdings, Ltd. VR , which is set to report fourth-quarter earnings on Feb 2, has an Earnings ESP of +5.13% and a Zacks Rank #1. You can see the complete list of today's Zacks #1 Rank stocks here .
Cigna Corporation CI has an Earnings ESP of +2.30% and a Zacks Rank #3. The company is set to report fourth-quarter earnings on Feb 2.
CNA Financial Corporation CNA has an Earnings ESP of +13.42% and a Zacks Rank #1. The company is slated to report fourth-quarter earnings on Feb 6.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.