Sun Life Financial (SLF) vs. China Life Insurance (LFC) Critical Survey

Sun Life Financial (NYSE: SLF) and China Life Insurance (NYSE:LFC) are both large-cap finance companies, but which is the superior investment? We will compare the two businesses based on the strength of their profitability, valuation, risk, earnings, analyst recommendations, dividends and institutional ownership.

Valuation and Earnings

This table compares Sun Life Financial and China Life Insurance’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Sun Life Financial $22.62 billion 1.11 $1.92 billion $3.20 12.91
China Life Insurance $105.48 billion 0.74 $4.77 billion $0.93 14.85

China Life Insurance has higher revenue and earnings than Sun Life Financial. Sun Life Financial is trading at a lower price-to-earnings ratio than China Life Insurance, indicating that it is currently the more affordable of the two stocks.

Volatility and Risk

Sun Life Financial has a beta of 0.91, meaning that its share price is 9% less volatile than the S&P 500. Comparatively, China Life Insurance has a beta of 1.58, meaning that its share price is 58% more volatile than the S&P 500.

Dividends

Sun Life Financial pays an annual dividend of $1.46 per share and has a dividend yield of 3.5%. China Life Insurance pays an annual dividend of $0.14 per share and has a dividend yield of 1.0%. Sun Life Financial pays out 45.6% of its earnings in the form of a dividend. China Life Insurance pays out 15.1% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Sun Life Financial has raised its dividend for 2 consecutive years. Sun Life Financial is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Profitability

This table compares Sun Life Financial and China Life Insurance’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Sun Life Financial 7.59% 12.61% 0.99%
China Life Insurance 5.09% 10.17% 1.14%

Insider & Institutional Ownership

41.8% of Sun Life Financial shares are held by institutional investors. Comparatively, 0.4% of China Life Insurance shares are held by institutional investors. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.

Analyst Ratings

This is a breakdown of current recommendations and price targets for Sun Life Financial and China Life Insurance, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Sun Life Financial 0 3 4 0 2.57
China Life Insurance 1 2 7 0 2.60

Sun Life Financial currently has a consensus target price of $54.60, indicating a potential upside of 32.17%. China Life Insurance has a consensus target price of $13.85, indicating a potential upside of 0.29%. Given Sun Life Financial’s higher possible upside, research analysts clearly believe Sun Life Financial is more favorable than China Life Insurance.

About Sun Life Financial

Sun Life Financial Inc., a financial services company, provides insurance, wealth, and asset management solutions to individuals and corporate clients, high-net-worth individuals, and families. It operates through Sun Life Financial Canada, Sun Life Financial United States, Sun Life Financial Asset Management, Sun Life Financial Asia, and Corporate segments. The company offers life, health, long-term and short-term disability, absence management, medical stop-loss, and dental insurance, as well as vision and voluntary insurance, such as accident and critical illness. It also provides a suite of voluntary benefits solutions to individual plan members, including post-employment life and health plans; asset management and group retirement products and services; and contribution pension plans and defined benefit solutions, as well as mutual funds. The company distributes its products through direct sales agents, managing general agents, independent general agents, financial intermediaries, broker-dealers, banks, pension and benefits consultants, and other third-party marketing organizations. Sun Life Financial Inc. was founded in 1999 and is headquartered in Toronto, Canada.

About China Life Insurance

China Life Insurance Company Limited, together with its subsidiaries, operates as a life insurance company in the People's Republic of China. The company operates in four segments: Life Insurance Business, Health Insurance Business, Accident Insurance Business, and Other Business. It offers individual and group life, annuity, accident, and health insurance products, as well as provides pension products. The company is also involved in reinsurance business; the asset management, fund management, and health management activities; retirement properties investment; and provision of financial services. It sells its products through agents, direct sales representatives, and dedicated and non-dedicated agencies. The company was founded in 1949 and is based in Beijing, the People's Republic of China. China Life Insurance Company Limited is a subsidiary of China Life Insurance (Group) Company Limited.

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