Yahoo Finance Primerica (PRI) Stock Rises 15% YTD: Will the Rally Last?
Primerica’s PRI shares have gained 15.3% year to date, outperforming the industry’s increase of 9%, the Finance sector’s rise of 5.3% and the Zacks S&P 500 composite’s increase of 15% in the said time frame.
A compelling portfolio, strong market presence and a solid capital position drive this Zacks Rank #3 (Hold) life insurer. PRI’s earnings have risen 17.6% in the past five years, outperforming the industry average of 5.9%.
This second-largest issuer of term-life insurance coverage in North America presently has a VGM Score of B. It envisions being a successful senior health business while continuing to enhance its shareholders’ value.
Return on equity (ROE), a profitability measure to identify how efficiently a company is utilizing its shareholders’ funds, has been improving over the last several years. PRI’s trailing 12-month ROE of 27.4% is better than the industry average of 15.5%.
Also, the return on invested capital in the trailing 12 months was 7%, better than the industry average of 0.7%, reflecting PRI’s efficiency in utilizing funds to generate income.
Image Source: Zacks Investment Research
Will the Bull Run Continue?
Strong demand for protection products ensures sales growth and policy persistency. PRI noted that nearly 48% of middle-income Americans are ready for retirement based on their investment and savings habits. Here life-licensed sales representatives can help in capitalizing on growth opportunities. Thus, management estimates more than a 3% rise in sales force size in 2024.
A strong business model makes it well-poised to cater to the middle market's increased demand for financial security. Also, licensed representatives coupled with growing distribution capabilities should continue to drive operational results. The life insurer estimates a 3-5% rise in the number of Term Life policies and a high single-digit growth in Investment and Savings Products sales.
Life insurers are direct beneficiaries of an improved interest rate environment. An improved interest rate environment should drive net investment income.
Primerica has a solid balance sheet, courtesy of improving leverage ratio and solid liquidity. It also scores strongly with credit rating agencies.
The strength of its Term-life insurance business ensures consistent free cash flow. Notably, its free cash flow conversion has remained more than 100% over the last many quarters, reflecting its solid earnings.
The Zacks Consensus Estimate for Primerica’s 2024 earnings is pegged at $17.66 per share, indicating an increase of 9.9% on 6.7% higher revenues of $3 billion. The Zacks Consensus Estimate for Primerica’s 2025 earnings is pegged at $19.64 per share, indicating an increase of 11.2% on 5.3% higher revenues of $3.2 billion. It has a Growth Score of B.
Wealth Distribution
In its effort to enhance shareholders' value, the life insurer raises dividends each year as well as buys back shares. Dividends increased at a 10-year CAGR of 20%. The company also has $315.9 million worth of shares remaining under authorization.
Stocks to Consider
Some better-ranked stocks from the insurance industry are Reinsurance Group of America RGA, Palomar Holdings PLMR and ProAssurance PRA.
Reinsurance Group delivered a four-quarter average earnings surprise of 19.48%. The stock has gained 29.4% year to date. The Zacks Consensus Estimate for RGA’s 2024 and 2025 earnings implies a 5.2% and 4.9% year-over-year increase, respectively. It carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Palomar’s earnings surpassed estimates in each of the last four quarters, the average earnings surprise being 15.10%. Year to date, PLMR’s stock has surged 50%. The Zacks Consensus Estimate for PLMR’s 2024 and 2025 earnings indicates 26% and 18% year-over-year growth, respectively. It sports a Zacks Rank #1.
ProAssurance earnings surpassed estimates in two of the last four quarters and missed in the other two. Year to date, PRA’s stock has lost 11.8%. The Zacks Consensus Estimate for PRA’s 2024 and 2025 earnings implies 371.4% and 72.6% year-over-year growth, respectively. It sports a Zacks Rank #1.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
ProAssurance Corporation (PRA) : Free Stock Analysis Report
Reinsurance Group of America, Incorporated (RGA) : Free Stock Analysis Report
Primerica, Inc. (PRI) : Free Stock Analysis Report
Palomar Holdings, Inc. (PLMR) : Free Stock Analysis Report
