UNM Outperforms Industry, Trades at a Premium: Should You Buy the Stock?

Shares of  Unum Group UNM have gained 9.6% year to date, outperforming its industry,the Finance sector,  and the Zacks S&P 500 Composite’s growth of 0.7%, 8.4% and 5.9%, respectively.

The steady rise in premiums, fueled by strong sales and high persistency in core lines, coupled with favorable benefits experience, helped the stock trend higher.

The insurer has a market capitalization of $14.07 billion. The average volume of shares traded in the last three months was 1.25 million.

UNM vs Industry, Sector & S&P 500 YTD

UNM Shares Are Affordable

Unum Group’sshares are trading at a discount compared to the Zacks Accident and Health Insurance industry. Its forward price-to-book value of 1.25X is lower than the industry average of 1.83X, the Finance sector’s 4.26X and the Zacks S&P 500 Composite’s 8.42X. The insurer has a Value Score of A.

Shares of other insurers, such as AMERISAFE, Inc. AMSF, Aflac Incorporated AFL and Trupanion TRUP, are trading at a multiple higher than the industry average.

UNM’s Growth Projection Encourages

The Zacks Consensus Estimate for Unum Group’s 2025 revenues is pegged at $13.2 billion, implying a year-over-year improvement of 2.8%. The consensus estimate for 2026 earnings per share and revenues indicates an increase of 9.1% and 3.5%, respectively, from the corresponding 2025 estimates. The expected long-term earnings growth is pegged at 7.2%, better than the industry average of 6%.

Average Target Price for UNM Suggests Upside

Based on short-term price targets offered by 14 analysts, the Zacks average price target is $94.43 per share. The average suggests a potential 17.4% upside from the last closing price.

Bearish Analyst Sentiment on UNM

Analysts covering the stock have lowered their estimates for 2025 and 2026 over the past 60 days.

The Zacks Consensus Estimate for 2025 earnings has moved down 0.3% in the past 60 days, while the same for 2026 has moved down 0.1% in the same time frame.

UNM’s Impressive Dividend History

In May 2025, Unum Group increased its dividend by 10%, marking its 16th hike in 15 years, with an expected payout of $300–$330 million and a payout ratio of around 19.4%. With a dividend yield of 2.1%, slightly above the industry average, it remains attractive to income-focused investors.

Key Points to Note for UNM

Unum Group’s disciplined pricing and reserving strategies have supported its profitability, with premium income rising 3.5% year over year to $2.7 billion in the first quarter of 2025. Growth was seen across core segments, helped by prior sales and the recapture of a previously ceded individual disability block. For 2025, the company projects sales growth of 5–10%, premium growth of 4%-7%, and a 6–10% increase in after-tax adjusted operating EPS, with slightly higher targets over the long term.

Unum’s core segments, Unum U.S. and Colonial Life, have consistently grown in operating income over the past few years. Unum U.S. has gained from disciplined sales, high persistency in group lines, and growth of dental and vision offerings. Colonial Life’s performance has been driven by strong premium growth and favorable risk experience, with first-quarter 2025 adjusted operating income up 1.8% to $115.7 million, sales increasing 2.2% to $105.3 million and premium income rising 2.3% to $457.3 million.

Sustained solid operating results have been driving a robust level of statutory earnings and capital, thereby enhancing financial flexibility. Unum Group boasts a solid capital position supporting a prudent capital outlay.

Unum Group faces several challenges of concern, including rising expenses that could pressure margins, declining premiums and lower returns in the Closed Block segment, and ongoing losses in the corporate segment. Additionally, muted growth in investment income due to past low-rate investments remains a limiting factor. However, the company’s strategic focus on higher-growth, stable-margin businesses may support its long-term prospects.

Conclusion

Unum Group continues to demonstrate stable fundamentals supported by disciplined operations, consistent premium growth, and a strong track record of dividend increases. At the same time, challenges such as rising expenses and limited growth in investment income may continue to put pressure on the company. A bearish analyst sentiment also keeps us on the sideline. It is therefore wise to adopt a wait-and-see approach on this Zacks Rank #3 (Hold) stock. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research