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Is Primerica (PRI) a Great Stock for Value Investors?
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Value investing is easily one of the most popular ways to find great stocks in any market environment. After all, who wouldn’t want to find stocks that are either flying under the radar and are compelling buys, or offer up tantalizing discounts when compared to fair value?
One way to find these companies is by looking at several key metrics and financial ratios, many of which are crucial in the value stock selection process. Let’s put Primerica, Inc. (PRI - Free Report) stock into this equation and find out if it is a good choice for value-oriented investors right now, or if investors subscribing to this methodology should look elsewhere for top picks:
PE Ratio
A key metric that value investors always look at is the Price to Earnings Ratio, or PE for short. This shows us how much investors are willing to pay for each dollar of earnings in a given stock, and is easily one of the most popular financial ratios in the world. The best use of the PE ratio is to compare the stock’s current PE ratio with: a) where this ratio has been in the past; b) how it compares to the average for the industry/sector; and c) how it compares to the market as a whole.
On this front, Primerica has a trailing twelve months PE ratio of 20.0, as you can see in the chart below:
This level actually compares favorably with the market at large, as the PE for the S&P 500 stands at about 21.5. If we focus on the long-term PE trend, Primerica’s current PE level puts it above its midpoint over the past five years, with the number having risen slightly over the past few months.
However, the stock’s PE compares unfavorably with the industry’s trailing twelve months PE ratio, which stands at 12.9. At the very least, this indicates that the stock is relatively overvalued right now, compared to its peers.
Nonetheless, we should point out that Primerica has a forward PE ratio (price relative to this year’s earnings) of 19.2, so it is fair to say that a slightly more value-oriented path may be ahead for Primerica stock in the near term too.
P/S Ratio
Another key metric to note is the Price/Sales ratio. This approach compares a given stock’s price to its total sales, where a lower reading is generally considered better. Some people like this metric more than other value-focused ones because it looks at sales, something that is far harder to manipulate with accounting tricks than earnings.
Right now, Primerica has a P/S ratio of about 2.8. This is lower than the S&P 500 average, which comes in at 3.4 right now. As we can see in the chart below, this is just slightly below the highs for this stock in particular over the past few years.
If anything, Primerica is towards the higher end of its range in the time period from a P/S metric, which suggests that the company’s stock price has already appreciated to some degree, relative to its sales.
Broad Value Outlook
In aggregate, Primerica currently has a Zacks Value Style Score of B, putting it into the top 40% of all stocks we cover from this look. This makes Primerica a solid choice for value investors, and some of its other key metrics make this pretty clear too.
For example, its P/CF ratio (another great indicator of value) comes in at 11.5, which is better than the industry average of 12.2. Clearly, PRI is a solid choice on the value front from multiple angles.
What About the Stock Overall?
Though Primerica might be a good choice for value investors, there are plenty of other factors to consider before investing in this name. In particular, it is worth noting that the company has a Growth grade of F and a Momentum score of D. This gives PRI a Zacks VGM score—or its overarching fundamental grade—of D. (You can read more about the Zacks Style Scores here >>)
Meanwhile, the company’s recent earnings estimates have been encouraging. The current quarter as well as the full year has seen three estimates go higher in the past sixty days compared to none lower.
As a result, the current quarter consensus estimate has risen by 4.3% in the past two months, while the full year estimate has increased 2.5%. You can see the consensus estimate trend and recent price action for the stock in the chart below:
This somewhat favorable trend is why the stock has a Zacks Rank #2 (Buy) and why we are looking for better performance from the company in the near term.
Bottom Line
Primerica is an inspired choice for value investors, as it is hard to beat its incredible lineup of statistics on this front. With a good industry rank (among the Top 43%) and strong Zacks Rank, Primerica looks like a strong value contender. In fact, over the past one year, the industry has clearly outperformed the broader market, as you can see below:
So, it might pay for value investors to delve deeper into the company’s prospects, as fundamentals indicate that this stock could be a compelling pick.
Today's Stocks from Zacks' Hottest Strategies
It's hard to believe, even for us at Zacks. But while the market gained +18.8% from 2016 - Q1 2017, our top stock-picking screens have returned +157.0%, +128.0%, +97.8%, +94.7%, and +90.2% respectively.
And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - Q1 2017, the composite yearly average gain for these strategies has beaten the market more than 11X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation.
Image: Bigstock
Is Primerica (PRI) a Great Stock for Value Investors?
Value investing is easily one of the most popular ways to find great stocks in any market environment. After all, who wouldn’t want to find stocks that are either flying under the radar and are compelling buys, or offer up tantalizing discounts when compared to fair value?
One way to find these companies is by looking at several key metrics and financial ratios, many of which are crucial in the value stock selection process. Let’s put Primerica, Inc. (PRI - Free Report) stock into this equation and find out if it is a good choice for value-oriented investors right now, or if investors subscribing to this methodology should look elsewhere for top picks:
PE Ratio
A key metric that value investors always look at is the Price to Earnings Ratio, or PE for short. This shows us how much investors are willing to pay for each dollar of earnings in a given stock, and is easily one of the most popular financial ratios in the world. The best use of the PE ratio is to compare the stock’s current PE ratio with: a) where this ratio has been in the past; b) how it compares to the average for the industry/sector; and c) how it compares to the market as a whole.
On this front, Primerica has a trailing twelve months PE ratio of 20.0, as you can see in the chart below:
This level actually compares favorably with the market at large, as the PE for the S&P 500 stands at about 21.5. If we focus on the long-term PE trend, Primerica’s current PE level puts it above its midpoint over the past five years, with the number having risen slightly over the past few months.
However, the stock’s PE compares unfavorably with the industry’s trailing twelve months PE ratio, which stands at 12.9. At the very least, this indicates that the stock is relatively overvalued right now, compared to its peers.
Nonetheless, we should point out that Primerica has a forward PE ratio (price relative to this year’s earnings) of 19.2, so it is fair to say that a slightly more value-oriented path may be ahead for Primerica stock in the near term too.
P/S Ratio
Another key metric to note is the Price/Sales ratio. This approach compares a given stock’s price to its total sales, where a lower reading is generally considered better. Some people like this metric more than other value-focused ones because it looks at sales, something that is far harder to manipulate with accounting tricks than earnings.
Right now, Primerica has a P/S ratio of about 2.8. This is lower than the S&P 500 average, which comes in at 3.4 right now. As we can see in the chart below, this is just slightly below the highs for this stock in particular over the past few years.
If anything, Primerica is towards the higher end of its range in the time period from a P/S metric, which suggests that the company’s stock price has already appreciated to some degree, relative to its sales.
Broad Value Outlook
In aggregate, Primerica currently has a Zacks Value Style Score of B, putting it into the top 40% of all stocks we cover from this look. This makes Primerica a solid choice for value investors, and some of its other key metrics make this pretty clear too.
For example, its P/CF ratio (another great indicator of value) comes in at 11.5, which is better than the industry average of 12.2. Clearly, PRI is a solid choice on the value front from multiple angles.
What About the Stock Overall?
Though Primerica might be a good choice for value investors, there are plenty of other factors to consider before investing in this name. In particular, it is worth noting that the company has a Growth grade of F and a Momentum score of D. This gives PRI a Zacks VGM score—or its overarching fundamental grade—of D. (You can read more about the Zacks Style Scores here >>)
Meanwhile, the company’s recent earnings estimates have been encouraging. The current quarter as well as the full year has seen three estimates go higher in the past sixty days compared to none lower.
As a result, the current quarter consensus estimate has risen by 4.3% in the past two months, while the full year estimate has increased 2.5%. You can see the consensus estimate trend and recent price action for the stock in the chart below:
Primerica, Inc. Price and Consensus
Primerica, Inc. Price and Consensus | Primerica, Inc. Quote
This somewhat favorable trend is why the stock has a Zacks Rank #2 (Buy) and why we are looking for better performance from the company in the near term.
Bottom Line
Primerica is an inspired choice for value investors, as it is hard to beat its incredible lineup of statistics on this front. With a good industry rank (among the Top 43%) and strong Zacks Rank, Primerica looks like a strong value contender. In fact, over the past one year, the industry has clearly outperformed the broader market, as you can see below:
So, it might pay for value investors to delve deeper into the company’s prospects, as fundamentals indicate that this stock could be a compelling pick.
Today's Stocks from Zacks' Hottest Strategies
It's hard to believe, even for us at Zacks. But while the market gained +18.8% from 2016 - Q1 2017, our top stock-picking screens have returned +157.0%, +128.0%, +97.8%, +94.7%, and +90.2% respectively.
And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - Q1 2017, the composite yearly average gain for these strategies has beaten the market more than 11X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation.
See Them Free>>