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Here's Why You Should Add Primerica (PRI) to Your Portfolio
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Primerica Inc. (PRI - Free Report) is set to benefit from its compelling portfolio, strong market presence and solid capital position. These, along with growth projections as well as positive analyst sentiment, make this Zacks Rank #2 (Buy) life insurer worth adding to your portfolio.
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 envisions being a successful senior health business while continuing to enhance its shareholders’ value.
An Outperformer
Shares have gained 26.4% year to date, outperforming the industry’s increase of 12.4%, the Finance sector’s rise of 11.9% and the Zacks S&P 500 composite’s increase of 16.9% in the said time frame.
Image Source: Zacks Investment Research
Northbound Estimate Revision
The Zacks Consensus Estimate for 2024 and 2025 earnings has moved 1.1% and 1.4% north, respectively, in the past 30 days, reflecting analysts’ optimism.
Optimistic Growth Projections
The Zacks Consensus Estimate for Primerica’s 2024 earnings is pegged at $17.92 per share, indicating an increase of 11.5% on 5.5% higher revenues of $3 billion. The Zacks Consensus Estimate for Primerica’s 2025 earnings is pegged at $19.96 per share, indicating an increase of 11.4% on 3.5% higher revenues of $3.1 billion.
Return on Capital
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 27.8% is better than the industry average of 15.5%.
Also, the return on invested capital in the trailing 12 months was 7.2%, better than the industry average of 0.7%, reflecting PRI’s efficiency in utilizing funds to generate income.
Growth Drivers
Primerica noted that nearly 48% of middle-income Americans are ready for retirement based on their investment and savings habits. Strong demand for protection products ensures sales growth and policy persistency. Thus, life-licensed sales representatives should play a vital role in capitalizing on growth opportunities. Management estimates more than a 5% 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, a strong licensed force coupled with growing distribution capabilities should continue to drive operational results. The life insurer estimates the number of Term Life policies to grow in low single digits and about 15% in Investment and Savings Products sales.
The life insurer has also decided to exit the senior health market as it believes this business will not be able to return the desired value for shareholders, given a challenging senior health distribution market. This will help PRI channel resources to businesses that will accelerate growth.
Life insurers are direct beneficiaries of an improved interest rate environment. An improved interest rate environment should drive net investment income. However, expectations of a rate cut in the September FOMC meeting with more in the cards this year keep us cautious.
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 solid earnings.
Wealth Distribution
In its effort to enhance shareholders' value, the life insurer raises dividends each year as well as buys back shares. It increased dividends at a 10-year CAGR of 16.8%. It also has $173.2 million worth of shares remaining under authorization.
Reinsurance Group’s earnings surpassed estimates in each of the last four quarters, the average earnings surprise being 20.51%. The stock has gained 30.5% year to date. The Zacks Consensus Estimate for RGA’s 2024 and 2025 earnings implies an 8.2% and 8.3% year-over-year increase, respectively.
Brighthouse Financial’s earnings surpassed estimates in three of the last four quarters, missing in one, the average earnings surprise being 3.76%. Year to date, BHF’s stock has lost 14.2%. The Zacks Consensus Estimate for BHF’s 2024 and 2025 earnings indicates 28% and 11% year-over-year growth, respectively.
The Zacks Consensus Estimate for F&G Annuities & Life’s 2024 and 2025 earnings implies 67.2% and 18.5% year-over-year growth, respectively. The consensus estimate for 2024 has risen 4.2% in the past 30 days. Year to date, FG’s stock has lost 9.4%.
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Here's Why You Should Add Primerica (PRI) to Your Portfolio
Primerica Inc. (PRI - Free Report) is set to benefit from its compelling portfolio, strong market presence and solid capital position. These, along with growth projections as well as positive analyst sentiment, make this Zacks Rank #2 (Buy) life insurer worth adding to your portfolio.
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 envisions being a successful senior health business while continuing to enhance its shareholders’ value.
An Outperformer
Shares have gained 26.4% year to date, outperforming the industry’s increase of 12.4%, the Finance sector’s rise of 11.9% and the Zacks S&P 500 composite’s increase of 16.9% in the said time frame.
Image Source: Zacks Investment Research
Northbound Estimate Revision
The Zacks Consensus Estimate for 2024 and 2025 earnings has moved 1.1% and 1.4% north, respectively, in the past 30 days, reflecting analysts’ optimism.
Optimistic Growth Projections
The Zacks Consensus Estimate for Primerica’s 2024 earnings is pegged at $17.92 per share, indicating an increase of 11.5% on 5.5% higher revenues of $3 billion. The Zacks Consensus Estimate for Primerica’s 2025 earnings is pegged at $19.96 per share, indicating an increase of 11.4% on 3.5% higher revenues of $3.1 billion.
Return on Capital
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 27.8% is better than the industry average of 15.5%.
Also, the return on invested capital in the trailing 12 months was 7.2%, better than the industry average of 0.7%, reflecting PRI’s efficiency in utilizing funds to generate income.
Growth Drivers
Primerica noted that nearly 48% of middle-income Americans are ready for retirement based on their investment and savings habits. Strong demand for protection products ensures sales growth and policy persistency. Thus, life-licensed sales representatives should play a vital role in capitalizing on growth opportunities. Management estimates more than a 5% 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, a strong licensed force coupled with growing distribution capabilities should continue to drive operational results. The life insurer estimates the number of Term Life policies to grow in low single digits and about 15% in Investment and Savings Products sales.
The life insurer has also decided to exit the senior health market as it believes this business will not be able to return the desired value for shareholders, given a challenging senior health distribution market. This will help PRI channel resources to businesses that will accelerate growth.
Life insurers are direct beneficiaries of an improved interest rate environment. An improved interest rate environment should drive net investment income. However, expectations of a rate cut in the September FOMC meeting with more in the cards this year keep us cautious.
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 solid earnings.
Wealth Distribution
In its effort to enhance shareholders' value, the life insurer raises dividends each year as well as buys back shares. It increased dividends at a 10-year CAGR of 16.8%. It also has $173.2 million worth of shares remaining under authorization.
Other Stocks to Consider
Some other top-ranked stocks from the insurance industry are Reinsurance Group of America (RGA - Free Report) , Brighthouse Financial (BHF - Free Report) and F&G Annuities & Life, Inc. (FG - Free Report) , each carrying a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Reinsurance Group’s earnings surpassed estimates in each of the last four quarters, the average earnings surprise being 20.51%. The stock has gained 30.5% year to date. The Zacks Consensus Estimate for RGA’s 2024 and 2025 earnings implies an 8.2% and 8.3% year-over-year increase, respectively.
Brighthouse Financial’s earnings surpassed estimates in three of the last four quarters, missing in one, the average earnings surprise being 3.76%. Year to date, BHF’s stock has lost 14.2%. The Zacks Consensus Estimate for BHF’s 2024 and 2025 earnings indicates 28% and 11% year-over-year growth, respectively.
The Zacks Consensus Estimate for F&G Annuities & Life’s 2024 and 2025 earnings implies 67.2% and 18.5% year-over-year growth, respectively. The consensus estimate for 2024 has risen 4.2% in the past 30 days. Year to date, FG’s stock has lost 9.4%.