Comparing Unum (UNM) & Assurant (AIZ)

Unum (NYSE: UNM) and Assurant (NYSE:AIZ) are both finance companies, but which is the better investment? We will compare the two businesses based on the strength of their profitability, valuation, dividends, institutional ownership, earnings, risk and analyst recommendations.

Dividends

Unum pays an annual dividend of $0.92 per share and has a dividend yield of 1.9%. Assurant pays an annual dividend of $2.24 per share and has a dividend yield of 2.4%. Unum pays out 21.4% of its earnings in the form of a dividend. Assurant pays out 56.3% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Unum has increased its dividend for 9 consecutive years and Assurant has increased its dividend for 14 consecutive years. Assurant is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Valuation and Earnings

This table compares Unum and Assurant’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Unum $11.29 billion 0.95 $994.20 million $4.29 11.28
Assurant $6.42 billion 0.76 $519.60 million $3.98 23.47

Unum has higher revenue and earnings than Assurant. Unum is trading at a lower price-to-earnings ratio than Assurant, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Unum and Assurant’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Unum 8.81% 10.43% 1.54%
Assurant 8.10% 5.24% 0.71%

Institutional and Insider Ownership

93.0% of Unum shares are owned by institutional investors. Comparatively, 93.0% of Assurant shares are owned by institutional investors. 0.5% of Unum shares are owned by company insiders. Comparatively, 0.9% of Assurant shares are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

Analyst Ratings

This is a summary of current recommendations and price targets for Unum and Assurant, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Unum 2 7 3 0 2.08
Assurant 0 0 2 0 3.00

Unum presently has a consensus target price of $56.09, suggesting a potential upside of 15.89%. Assurant has a consensus target price of $121.00, suggesting a potential upside of 29.54%. Given Assurant’s stronger consensus rating and higher probable upside, analysts plainly believe Assurant is more favorable than Unum.

Volatility and Risk

Unum has a beta of 1.46, indicating that its share price is 46% more volatile than the S&P 500. Comparatively, Assurant has a beta of 0.55, indicating that its share price is 45% less volatile than the S&P 500.

Summary

Unum beats Assurant on 10 of the 16 factors compared between the two stocks.

Unum Company Profile

Unum Group, together with its subsidiaries, provides financial protection benefit solutions in the United States, the United Kingdom, and internationally. It operates through Unum US, Unum UK, Colonial Life, and Closed Block segments. The company offers group long-term and short-term disability, group life, and accidental death and dismemberment products; supplemental and voluntary products, such as individual disability, voluntary benefits, and dental and vision products; and accident, sickness, disability, life, and cancer and critical illness products. It also provides group pension, individual life and corporate-owned life insurance, reinsurance pools and management operations, and other products. The company sells its products primarily to employers for the benefit of employees. Unum Group sells its products through field sales personnel, independent brokers, and consultants, as well as independent contractor agency sales force. The company was founded in 1848 and is based in Chattanooga, Tennessee.

Assurant Company Profile

Assurant, Inc., through its subsidiaries, provides risk management solutions for housing and lifestyle markets in North America, Latin America, Europe, and the Asia Pacific. The company operates through three segments: Global Housing, Global Lifestyle, and Global Preneed. Its Global Housing segment provides lender-placed homeowners, manufactured housing, and flood insurance; renters insurance and related products; and mortgage solutions comprising property inspection and preservation, valuation and title, and other property risk management services. The Global Lifestyle segment offers mobile device protection products and related services, and extended service contracts for consumer electronics and appliances, as well as assistance services; vehicle protection services; and credit and other insurance services. Its Global Preneed segment provides pre-funded funeral insurance and annuity products. The company was formerly known as Fortis, Inc. and changed its name to Assurant, Inc. in February 2004. Assurant, Inc. was founded in 1892 and is headquartered in New York, New York.

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