Can Unum (UNM) Keep Earnings Surprise Streak Alive? - Analyst Blog

We expect accident and health insurer Unum Group UNM to beat estimates when it reports first-quarter 2014 results on May 7.

Why a Likely Positive Surprise?

Zacks ESP: Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is +2.35%. This is a meaningful and leading indicator of a positive earnings surprise.

Zacks Rank: Unum Group has a Zacks Rank #3 (Hold) increases the predictive power of ESP. Note that stocks with Zacks Rank #1, 2 and 3 have significantly higher chances of beating earnings. The Sell-rated stocks (#4 and 5) should never be considered going into an earnings announcement.  
The right combination of two key ingredients makes us confident of a positive earnings beat this release.

What is Driving the Better-than-Expected Earnings?

Disciplined underwriting, pricing, underwriting and reservation practices are expected to aid solid results for Unum in the first quarter.

Continued buybacks will also boost the bottom line.

In order to deal with the low interest rate environment, Unum has consistently raised prices in those product areas which are most affected by low rates. This in turn will drive favorable investment results.

The positive trend is backed by the trailing four-quarter average surprise of 2.48%, much of which was contributed by the 48.9% surprise achieved in the third quarter of 2013.

Other Stocks to Consider

Here are some other companies you may want to consider as our model shows these also have the right combination of elements to post an earnings beat this quarter:  

American Financial Group Inc. AFG, earnings ESP of +2.04% and a Zacks Rank #3.

The Allstate Corporation ALL, earnings ESP of +0.88% and a Zacks Rank #3.

Radian Group Inc. RDN earnings ESP of +15.00% and a Zacks Rank #3.