Sun Life Financial Inc (NYSE: SLF)

Sector: Financial Services Industry: Insurance - Diversified CIK: 0001097362
Market Cap 38.17 Bn
P/B 2.13
P/E 15.06
P/S 1.50
ROIC (Qtr) 14.77
Div Yield % 1.80
Rev 1y % (Qtr) 9.15
Total Debt (Qtr) 7.61 Bn
Debt/Equity (Qtr) 0.42
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About

Investment thesis

Bull case

  • Strong tangible asset base of 280.12B provides 36.83x coverage of total debt 7.61B, indicating robust asset backing and low credit risk.
  • Robust free cash flow of 1.94B exceeds capital expenditure of 105.84M by 18.30x, indicating strong organic growth funding capability.
  • Cash position of 10.83B provides exceptional 64.25x coverage of minority interest expenses 168.61M, indicating strong liquidity.
  • Cash reserves of 10.83B provide ample 412.25x coverage of acquisition spending 26.28M, enabling strategic growth opportunities.
  • Strong free cash flow of 1.94B provides 73.72x coverage of acquisition spending 26.28M, indicating disciplined M&A strategy.

Bear case

  • Operating cash flow of 2.04B barely covers its investment activities of (233.58M), with a coverage ratio of -8.75, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • Operating cash flow of 2.04B provides thin coverage of dividend payments of (1.51B) with a -1.36 ratio, suggesting potential dividend sustainability issues if operational performance deteriorates.
  • Operating cash flow of 2.04B is outpaced by equity issuance of (1.22B) (-1.68 ratio), indicating concerning reliance on equity markets for funding operations.
  • R&D investment of 0 represents just 0x of SG&A expenses of 6.59B, indicating potential underinvestment in innovation relative to administrative overhead.
  • R&D spending of 0 represents just 0x of capital expenditure 105.84M, indicating potential underinvestment in innovation relative to physical assets.

Legal Entity Breakdown of Revenue (2024)

Consolidated Entities Breakdown of Revenue (2024)

Peer comparison

Companies in the Insurance - Diversified
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 BRK-B Berkshire Hathaway Inc 1,086.07 Bn 16.10 2.71 127.24 Bn
2 AIG American International Group, Inc. 44.86 Bn 14.49 1.68 9.19 Bn
3 SLF Sun Life Financial Inc 38.17 Bn 15.06 1.50 7.61 Bn
4 ACGL Arch Capital Group Ltd. 36.73 Bn 9.05 1.88 2.73 Bn
5 BNT Brookfield Wealth Solutions Ltd. 11.42 Bn 8.65 0.80 4.77 Bn
6 FIHL Fidelis Insurance Holdings Ltd 2.08 Bn -143.64 0.81 0.84 Bn
7 IGIC International General Insurance Holdings Ltd. 1.24 Bn 35.96 3.93 0.00 Bn
8 WDH Waterdrop Inc. 0.65 Bn 9.10 1.42 0.01 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 0.09 0.32
EV to Cash from Ops. EV/CFO 13.20 14.23
EV to Debt EV to Debt 3.55 4.74
EV to EBIT EV/EBIT 7.26 15.68
EV to EBITDA EV/EBITDA 6.94 33.76
EV to Free Cash Flow [EV/FCF] EV/FCF 13.93 18.23
EV to Market Cap EV to Market Cap 0.71 0.76
EV to Revenue EV/Rev 1.06 1.55
Price to Book Value [P/B] P/B 2.13 1.50
Price to Earnings [P/E] P/E 15.06 -4.40
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Div Coverage (Qtr) 1.18 2.23
Dividend Payout Ratio % Div Payout % (Qtr) 27.20 395.61
Dividend per Basic Share Div per Share (Qtr) 1.22 1.19
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 25.75 10.14
Interest Coverage Int. cover (Qtr) 9.68 9.63
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) -6.58 19.97
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) 12.44 15.53
Dividend Growth (1y) % Div 1y % (Qtr) -59.47 -3.62
EBIAT Growth (1y) % EBIAT 1y % (Qtr) 14.75 7.45
EBITDA Growth (1y) % EBITDA Growth (1y) % 15.62 -3.03
EBIT Growth (1y) % EBIT 1y % (Qtr) 10.76 223.97
EBT Growth (1y) % EBT 1y % (Qtr) 15.14 226.15
EPS Growth (1y) % EPS 1y % (Qtr) 23.06 31.54
FCF Growth (1y) % FCF 1y % (Qtr) 16.77 -17.30
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) 10.86 3.76
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.06 0.18
Cash Payout Ratio Cash Payout (Qtr) 0.72 0.16
Cash Ratio Cash Ratio 0.00 0.08
Current Ratio Current Ratio 0.00 0.32
Debt to Equity Ratio Debt/Equity (Qtr) 0.42 0.20
Interest Cover Ratio Int Coverage (Qtr) 9.68 9.63
Times Interest Earned Times Interest Earned (Qtr) 9.68 9.63
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % 14.60 13.98
EBIT Margin % EBIT Margin % (Qtr) 20.02 29.75
EBT Margin % EBT Margin % (Qtr) 13.10 15.51
Gross Margin % Gross Margin % (Qtr) 41.20 45.01
Net Profit Margin % Net Margin % (Qtr) 10.00 13.40