Unum – A Concise Overview for Investors

It hasn't been a great evening session for Unum investors, who have watched their shares sink by -2.5% to a price of $48.48. Some of you might be wondering if it's time to buy the dip. If you are considering this, make sure to check the company's fundamentals first to determine if the shares are fairly valued at today's prices.

Unum Has Attractive Multiples and Potentially Undervalued:

Unum Group, together with its subsidiaries, provides financial protection benefit solutions primarily in the United States, the United Kingdom, Poland, and internationally. The company belongs to the Finance sector, which has an average price to earnings (P/E) ratio of 15.89 and an average price to book (P/B) ratio of 1.76. In contrast, Unum has a trailing 12 month P/E ratio of 7.2 and a P/B ratio of 0.91.

P/E rations can be placed into context by dividing them by the firm's expected 5-year EPS growth rate, which gives us its Price to Earnings Growth (PEG) ratio. Unum's PEG ratio is 1.06, which tells us the company is fairly valued in terms of growth. PEG ratios under 1 are considered an indicator of undervalued growth, but we need to keep in mind that many successful companies with excellent share performance have maintained much higher PEG ratios.

As always, a quantitative approach to a stock should be supplemented with a look at qualitative factors, such as the competence of its management team, quality of its corporate culture, and the wide variety of social and economic factors that can impact the success of its product.

Positive Cash Flows:

2018 2019 2020 2021 2022 2023
Revenue (M) $11,598 $11,999 $13,162 $12,008 $11,984 $12,386
Interest Income (M) $167 $177 $188 $185 $188 $195
Operating Margins 5% 12% 7% 9% 15% 13%
Net Margins 5% 9% 6% 8% 12% 10%
Net Income (M) $523 $1,100 $793 $981 $1,407 $1,284
Depreciation & Amort. (M) $101 $110 $114 $120 $110 $109
Diluted Shares (M) 220 210 204 205 202 198
Earnings Per Share $2.38 $5.24 $3.89 $4.79 $6.96 $6.5
EPS Growth n/a 120.17% -25.76% 23.14% 45.3% -6.61%
Avg. Price $33.76 $26.84 $17.2 $24.94 $29.75 $48.48
P/E Ratio 14.24 5.23 4.4 5.17 4.28 7.45
Free Cash Flow (M) $1,392 $1,456 $350 $1,277 $1,316 $1,068
CAPEX (M) $144 $151 $119 $110 $102 $135
EV / EBITDA 14.19 6.03 6.16 7.14 5.02 7.35
Total Debt (M) $2,971 $3,327 $3,346 $3,442 $3,430 $3,430
Net Debt / EBITDA 3.95 2.17 2.92 2.85 1.78 1.88

Unum has strong operating margins with a positive growth rate, low leverage levels, and a strong EPS growth trend. However, the firm has positive cash flows. Finally, we note that Unum has slight revenue growth and a flat capital expenditure trend.

The above analysis is intended for educational purposes only and was performed on the basis of publicly available data. It is not to be construed as a recommendation to buy or sell any security. Any buy, sell, or other recommendations mentioned in the article are direct quotations of consensus recommendations from the analysts covering the stock, and do not represent the opinions of Market Inference or its writers. Past performance, accounting data, and inferences about market position and corporate valuation are not reliable indicators of future price movements. Market Inference does not provide financial advice. Investors should conduct their own review and analysis of any company of interest before making an investment decision.