Sun Life Financial’s SLF focus on Asia operations, its strengthening asset management businesses, the scale-up of its U.S. operations, and a strong financial position bode well for growth. These factors, coupled with favorable growth estimates and a solid VGM Score of A, make SLF worth adding to one’s portfolio.

Sun Life has a decent track record of beating the Zacks Consensus Estimate for earnings in three of the last four quarters, while met estimates in one, the average being 3.32%. The company’s earnings grew 5.4% in the last five years, better than the industry average of 2%.

Zacks Rank & Price Performance

Sun Life currently carries a Zacks Rank #2 (Buy). Year to date, the stock has gained 5.7% compared with the industry’s increase of 5.9%.

Image Source: Zacks Investment Research

Optimistic Growth Projections

The Zacks Consensus Estimate for Sun Life’s 2024 and 2025 earnings is pegged at $5.09 and $5.43 per share, suggesting growth of 8.1% and 6.6% year over year, respectively. The expected long-term earnings growth rate is 8%. Sun Life targets bottom-line growth of 8-10% per annum over the medium term.

Business Tailwinds

Sun Life is strengthening its presence in the Asia market, which provides higher returns and growth than the North American markets. The contribution of Asia to Sun Life’s earnings has increased to 21% from 8% over the last few years.

The third largest insurer in Canada is improving its business mix and is thus shifting its growth focus toward products that block lower capital and offer more predictable earnings. Sun Life looks to be one of the top five players and remains focused on growing its voluntary benefits business.

In its effort to strengthen Asset Management, Sun Life Investment Management makes investments in private fixed-income, mortgages and real estate. It invests in pension plans and other institutional investors. Notably, Asset Management provides a higher return on equity, lower capital and volatility and has the potential for an earnings upside.

Operational efficiency has been aiding Sun Life in building a strong capital position.  The life insurer’s capital outlay includes a 40-50% dividend payout over the medium term. Also, given the company’s ongoing shift to fee-based capital-light businesses, it reiterated its medium-term ROE target of 18%.

It also has Value Score of A. This style score helps find the most attractive value stocks. Back-tested results have shown that stocks with a Value Score of A or B combined with a Zacks Rank #1 (Strong Buy) or #2 are best investment bets.