If you have been keeping track of our Daily Sector Snapshot sent out with the Morning Lineup and the Closer each day, you may have noticed that the Financial sector has been cheap relative to not only the other sectors, but also to its historical range. Financials have both the lowest P/E (14.21) and lowest price to book (1.49) of any sector, and its P/E is just in the 44th percentile of the past ten year’s range. Technology, for comparison, is in the 99th percentile and Utilities is in the 96th, meaning they’re very overvalued relative to recent historical levels.
Unum Group (UNM) is a Financial sector stock with one of the lowest valuations. UNM is the smallest (by market cap) company out of the S&P 500’s stocks in the Insurance industry group, but it also has one of the lowest price-to-book, price-to-sales, and price-to-earnings ratios. Adding to the stock’s attractiveness is a 3.81% dividend yield; the third-highest in the industry. With a dividend payout ratio of just 24.55% and a history of consistent growth over the past decade, the company appears capable of continuing to grow the payout without worry.
Part of the low valuation and low market cap is a result of the stock having nearly been cut in half over the past two years since the January 2018 high of $58.59. But more recently, the downtrend from that prior high appears to have ended. Since the Fall, UNM has been trading in a steady uptrend with a series of higher lows and lower highs. In early November, the stock broke out of its multiyear downtrend before successfully retesting this line twice in the past month. In the past few days, the stock has begun to move higher once again off of this retest. If you’re looking for a yield play with a chart pattern that looks to be turning higher, UNM might be worth some further analysis. Start a two-week free trial to Bespoke Institutional to access our Morning Lineup, Closer, Sector Snapshot, and much more.