Shares of Unum Group UNM are trading at a discount compared to the industry. Its price-to-book value of 1.31X is lower than the industry average of 1.83X, the Finance sector’s 4.46X and the Zacks S&P 500 Composite’s 8.03X.
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The insurer has a market capitalization of $14.2 billion. The average volume of shares traded in the last three months was 1.4 million.
Shares of other insurers include AMERISAFE, Inc. AMSF, Globe Life Inc. GL and Aflac Incorporated AFL, which are trading at 2.57X, 2.12X and 2.36X, respectively.
UNM’s Price Performance
Unum Group’s shares have gained 13% in the past three months, outperforming the industry’s growth of 10.2%.
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Shares of other insurers, including AMERISAFE, Globe Life, and Aflac, have gained 2.3%, 22.4% and 7.6%, respectively, in the past three months.
UNM’s Average Target Price Suggests Upside
Based on short-term price targets offered by 13 analysts, the Zacks average price target is $101.38 per share. The average suggests a potential 13.9% upside from the last closing price.
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The Zack Consensus Estimate of UNM
The Zacks Consensus Estimate for Unum Group’s 2026 revenues is pegged at $11.9 billion, implying a year-over-year decline of 10.3%, while 2026 EPS indicates a year-over-year increase of 7.6%. The consensus estimate for 2027 earnings per share (EPS) and revenues indicates an increase of 9.9% and 4.1%, respectively, from the corresponding 2026 estimates.
Earnings have grown 10.6% in the past five years, outperforming the industry average of 0.6%. The expected long-term earnings growth rate is 11.4%, better than the industry average of 10.3%.
Mixed Analyst Sentiment for UNM
The company has witnessed three upward earnings estimate revisions for 2026 over the past 60 days, against one movement in the opposite direction. For 2027, it has witnessed three downward movements, with no upward revisions. Thus, the Zacks Consensus Estimate for 2026 and 2027 earnings has moved north 0.2% and south 0.8%, respectively, over the same period.
What Drives UNM?
Premiums, the primary component of UNM’s top line, continue to benefit from its healthy in-force block growth and higher sales. In 2026, Unum Group anticipates total premium growth of 4-7%, driven by persistency, new sales, employment and salary growth, and the effectiveness of a renewal program. UNM expects adjusted operating income per share to be between $8.60 and $8.90, indicating growth of about 8-12%.
Unum Group continues to strengthen its core businesses through continued investments in technology and operational transformation, enhancing digital capabilities, customer engagement, and broker experience. These initiatives, combined with disciplined sales execution, strong persistency in group lines, large-case sales momentum, favorable disability claims experience and growth in voluntary benefits at Unum U.S., are expected to support robust premium growth and earnings expansion in 2026.
Operating income in the Colonial Life Segment has risen over the last few years, banking on improving premium income and favorable risk results. The company's conservative pricing and reserving practices have contributed to its overall profitability. Premium income should continue to increase due to prior period sales across all product lines. Management remains focused on moving toward a mix of businesses with higher growth and stable margins.
Unum Group enjoys a solid capital position and substantial statutory earnings and capital, leading to financial flexibility. The company has consistently enhanced shareholders’ value through dividend hikes and share buybacks, and expects to repurchase $1 billion of shares in 2026. The company has an impressive dividend track record, having increased dividends 19 times in the last 17 years and yielding better than the industry average, making it an attractive pick for yield-seeking investors.
Risks for UNM
Competitive pricing in the group disability market remains a key risk, as intense competition could pressure premium rates and constrain underwriting margins.
Unum Group has been witnessing a rise in total benefits and expenses over the past few years, inducing margin contraction. UNM expects the adjusted operating expense ratio to be 22%.
Performance at the Closed Block and Corporate segments has also been disappointing over the past few quarters.
Conclusion
Favorable sales trends, strong persistency, solid capital position, technology investments and effective capital deployment should continue to favour UNM over the long term. However, competitive pricing in the group disability market, weak performance at the Closed Block and Corporate segments, and a rise in total benefits and expenses over the past few years remain concerns.
The insurer should continue to gain from premium growth, dividend history and the attractive valuation of the stock. It is, therefore, wise to retain this Zacks Rank #3 (Hold) stock at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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Unum Group (UNM): Free Stock Analysis Report
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AMERISAFE, Inc. (AMSF): Free Stock Analysis Report
Globe Life Inc. (GL): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).