Unum Group Could Soar If These 3 Things Go Right

Unum Group (NYSE: UNM) doesn’t operate in a hypergrowth sector, nor is it making moonshot bets on unproven technology.

Instead, it produces steady income from the health, disability, and benefits coverage corner of the insurance market. That stability and predictability have helped lift the stock price by 180% over the past five years, which was more than double the 75% return of the S&P 500 over the same period.

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However, the company’s recent results haven’t been as rosy. During its fourth-quarter 2025 earnings call on Feb. 6, the management team acknowledged that the insurer’s performance was worse than expected. In the wake of that earnings report, Unum stock dipped, and is now down by about 6% on the year.

The overall situation is that this is a solid company that has hit a temporary bump, which is often when investable opportunities pop up. And if three things in particular occur, the stock could prove a winner for those who buy it now.

For 2026, Unum says it plans to return 100% of projected free cash flow to shareholders through a mix of buybacks and dividends.

Buybacks tend to indicate that a company’s leadership believes its stock is undervalued, and a steady pace of repurchases acts as a built-in source of demand for the stock. That will help support the share price even if the broader market declines.

Additionally, that financial engineering gives earnings per share (EPS) a boost by reducing the outstanding share count.

If Unum follows through on this plan, the combination of consistent buybacks and rising EPS could attract more investors and help the stock price get out of its slump.

Premiums are the lifeblood of the insurance industry. In 2025, Unum reported core premium growth of 4.4%, which was in line with the 4.5% growth recorded in 2024.

For 2026, the company expects core premium growth between 4% and 7%. Hitting the high end of that guidance range would be encouraging, but what could send shares meaningfully higher is if Unum delivers premium growth above it.

Stronger premium growth would mean the company is bringing in more revenue than analysts modeled, and that type of surprise often gets them to revisit their ratings and price targets. Those positive revisions can, in turn, attract more buyers.

The insurer’s margins weakened in 2025 as its disability benefit ratio rose to 62.4% for the year and to 64.2% in Q4. That increase was due to unusually low mortality rates and fewer workers coming off their claims.

Management expects those pressures to ease in 2026, forecasting that disability benefit ratios will settle down in the 62% to 64% range. It also believes the disability business can still generate returns above 25%, meaning that division produces substantial profits on the capital Unum allocates to it.

Stabilization could lift underwriting profitability and help support the company’s projected 8% to 12% EPS growth outlook.

If Unum demonstrates steady progress, that may be enough to reverse the recent downturn and unlock the next stretch for the stock price to run higher. That progress would show up through share buybacks, stabilizing margins, and premium growth.

Unum shares won’t offer parabolic gains in the short term, but each quarter gives the company another chance to prove that its situation is improving.

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Jack Delaney has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Unum Group Could Soar If These 3 Things Go Right was originally published by The Motley Fool