When a company posts strong earnings and the company’s stock price subsequently drops on the news, investors need to step back and assess the reasons for the drop and whether the drop is warranted or represents a buying opportunity for a company that would fit well into a long-term portfolio.
For Sun Life Financial Inc. (TSX:SLF)(NYSE:SLF), this seems to have been the case. After market close on Wednesday, the insurance company announced earnings which showed significant year-over-year improvement and top and bottom line growth, with earnings expanding by more than 24%, assets under management growing by more than 9% and the company’s return on equity improving by 180 basis points.
These impressive results seemingly did not satisfy investor expectations, investors who likely expected more from the insurer. Insurance companies across the board appear to be experiencing weakness of late, and discussion around whether the implied industry-wide headwinds will take hold and affect profits moving forward remains to be seen.
In the insurance space, a wide range of options are available for an investor considering North American names, providing diversification across geography, consumer demographics, and sector; Sun Life Financial remains one of the largest and most well diversified out of the major insurers, providing investors access to impressive returns amid market uncertainty which has seemingly held back the insurer’s stock price, at least for now. For investors looking to buy an insurance name at a decent price, I would suggest starting with a company such as Sun Life Financial.
Invest wisely, my friends.
