Should You Buy Sun Life Financial Inc. Today?

Sun Life Financial Inc. (TSX:SLF)(NYSE:SLF) released fourth-quarter earnings after the market closed on February 11 and its stock has reacted by moving lower. What should you do with the stock now?

| More on:

You’re reading a free article with opinions that may differ from The Motley Fool’s premium investing services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Sun Life Financial Inc. (TSX:SLF)(NYSE:SLF), one of the world’s leading financial services organizations, announced fourth-quarter earnings after the market closed on February 11 and its stock has responded by falling over 2%. Let’s take a thorough look at the results to determine if we should consider using this weakness as a long-term buying opportunity, or as a warning sign to avoid the stock for the time being.

Breaking down the fourth-quarter results

Here’s a chart of Sun Life’s fourth-quarter earnings compared to its results in the same period a year ago.

Metric Q4 2014 Q4 2013
Underlying EPS from continuing operations $0.59 $0.61
Adjusted revenue $6.13 billion $6.20 billion

Source: Sun Life Financial

Sun Life’s diluted underlying earnings per share decreased 3.3% and its adjusted revenue decreased 1.1% compared to the fourth quarter of fiscal 2013. The company’s slight decline in earnings per share can be attributed to underlying net income from continuing operations decreasing 4% to $360 million, and its slight decline in revenue can be attributed to net premium revenue decreasing 4.4% to $2.7 billion for the quarter.

Here’s a quick breakdown of 12 other notable statistics and updates from the report compared to the year-ago period:

  1. Interest and other investment income increased 6.2% to $1.26 billion.
  2. Fee income increased 12.6% to $1.17 billion.
  3. General fund assets increased 13% to $139.42 billion.
  4. Segregated fund assets increased 10.2% to $83.94 billion.
  5. Mutual funds, managed funds, and other assets under management increased 16.1% to $511.09 billion.
  6. Total assets under management (AUM) increased 14.8% to $734.44 billion.
  7. Total adjusted premiums and deposits decreased 3% to $30.89 billion.
  8. Total capital increased 6.3% to $21.74 billion.
  9. Operating return on equity (ROE) contracted 510 basis points to 12.6%.
  10. Book value per share increased 11.2% to $26.87.
  11. Market capitalization increased 12.2% to $25.7 billion.
  12. Ended the quarter with $6.82 billion in cash and cash equivalents, an increase of 10.6% from the third quarter.

Sun Life announced that it will be maintaining its quarterly dividend of $0.36 per share, and the next payment will come on March 31 to shareholders of record at the close of business on February 25.

Is now the time to invest in Sun Life Financial?

Sun Life Financial is one of the world’s leading providers of financial products and services, but year-over-year declines in earnings per share and revenue in the fourth quarter has caused its stock to fall over 2%.

Even though I think the post-earnings weakness in Sun Life’s stock is warranted, I also think it represents an intriguing long-term buying opportunity. I think this because the stock trades at very inexpensive valuations, including just 13.8 times fiscal 2014’s earnings per share of $2.96, only 12.3 times fiscal 2015’s estimated earnings per share of $3.32, and a mere 1.5 times its book value per share of $26.87.

In addition, the company pays an annual dividend of $1.44 per share, which gives its stock a bountiful 3.5% yield at current levels and makes it both a value and dividend play today.

With all of the information provided above in mind, I think Sun Life Financial represents one of the best long-term investment opportunities in the financial sector today, so Foolish investors should take a closer look and strongly consider initiating positions.

Should you invest $1,000 in Royal Bank of Canada right now?

Before you buy stock in Royal Bank of Canada, consider this:

The Motley Fool Stock Advisor Canada analyst team just identified what they believe are the Top Stocks for 2025 and Beyond for investors to buy now… and Royal Bank of Canada wasn’t one of them. The Top Stocks that made the cut could potentially produce monster returns in the coming years.

Consider MercadoLibre, which we first recommended on January 8, 2014 ... if you invested $1,000 in the “eBay of Latin America” at the time of our recommendation, you’d have $21,345.77!*

Stock Advisor Canada provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month – one from Canada and one from the U.S. The Stock Advisor Canada service has outperformed the return of S&P/TSX Composite Index by 24 percentage points since 2013*.

See the Top Stocks * Returns as of 4/21/25

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Joseph Solitro has no position in any stocks mentioned.

Confidently Navigate Market Volatility: Claim Your Free Report!

Feeling uneasy about the ups and downs of the stock market lately? You’re not alone. At The Motley Fool Canada, we get it — and we’re here to help. We’ve crafted an essential guide designed to help you through these uncertain times: "5-Step Checklist: How to Prepare Your Portfolio for Volatility."

Don't miss out on this opportunity for peace of mind. Just click below to learn how to receive your complimentary report today!

Get Our Free Report Today

More on Investing

close-up photo of investor Warren Buffett
Dividend Stocks

Billionaires Are Selling Berkshire Stock and Buying This TSX Stock Instead

Warren Buffett is stepping aside, leading to a drop in share price. So what's next for investors?

Read more »

Dividend Stocks

1 Magnificent Canadian Stock Down 30% to Buy and Hold Forever

Analysts are upgrading this Canadian stock that has spent way too long trending downwards.

Read more »

A plant grows from coins.
Dividend Stocks

How I’d Use $7,000 to Create a TFSA Income Stream For Life

Investors can create a reliable income stream by adding these three dividend stocks to your TFSA.

Read more »

a man relaxes with his feet on a pile of books
Energy Stocks

I’d Put $5,000 in This Dividend Giant for Decades of Income

Looking for a stock that can provide decades of income in addition to strong growth and defensive appeal? Consider this…

Read more »

ETF chart stocks
Dividend Stocks

Investing $7,000 in Your TFSA? Consider These 2 Canadian ETFs for Retirement

Turn $7,000 into tax-free wealth! 2 top ETFs for 4%+ dividends and retirement growth to max your TFSA this May!

Read more »

open vault at bank
Stocks for Beginners

Where Will Royal Bank Stock Be in 2 Years?

Royal Bank stock has long been a top stock, but can that last over the next two years?

Read more »

Muscles Drawn On Black board
Dividend Stocks

The Smartest Canadian Stock to Buy With $5,000 Right Now

This smartest Canadian stock can convert your $5,000 investment to about $30,595 in 10 years, more than six times your…

Read more »

happy woman throws cash
Dividend Stocks

How I’d Turn $14,000 in My TFSA into a Money-Making Machine

Investing over time in a diversified Canadian dividend ETF like the VDY is one way to make a money-making machine…

Read more »