Today I added to my position in the financial services firm, Sun Life Financial (SLF). For my thoughts on Sun Life have a look at my
Sun Life Financial purchase post, which I put up on this blog when I initiated my position about one year ago. Back then Sun Life was trading around $50 per share and yielding 2.5%. Sun Life's 2006 earnings per share (EPS) was $3.58/share. The company was paying a dividend of $0.32/share.
Fast forward to today where I bought Sun Life at $47.10/share where it yielded 3.1%. Sun Life's 2007 EPS was $3.84/share. The company is now paying a dividend of $0.36/share.
Therefore since I initiated my position last May the following has occurred:
- Sun Life has grown its earnings per share by 7.3%
- On a 'constant currency'/operating basis EPS would have been up 13%
- SLF has grown its dividend per share by 12.5%
- The stock's yield has risen from 2.5% to 3.1%
- Return on Equity (ROE) increased from 13.8% to 14.3%
- P/E ratio has dropped from 13.6 to 12.1
- The share price has dropped by 6.7% to $47.10
On my valuation model Sun Life looks cheap as it is trading more than 20% under it's fair value given a 9% EPS growth rate and using a multiple of 11.5x. I will likely keep buying these financials as long as they remain good value compared with the rest of the market. Averaging down on a consistent company such as SLF, as dividends, earnings and other fundamentals continue to grow, is a no brainer.
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