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Can Stronger Premiums Drive Torchmark's (TMK) Q3 Earnings?
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We expect Torchmark Corporation to surpass expectations in third-quarter 2018 results after the market closes on Oct 24. Last reported quarter, the company delivered a positive earnings surprise of 1.34%.
Why a Likely Positive Surprise?
Our proven model clearly shows that Torchmark has the right combination of the following two key ingredients to beat estimates this earnings season.
Earnings ESP: Torchmark has an Earnings ESP of +0.44%. This is because the Most Accurate Estimate is pegged at $1.53, higher than the Zacks Consensus Estimate of $1.52. The positive ESP indicates a likely earnings surprise. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Torchmark holds a Zacks Rank #2 (Buy), which increases the predictive power of ESP as stocks with a favorable Zacks Rank #1 (Strong Buy), 2 or 3 (Hold) along with a positive Earnings ESP have significantly higher chances of an earnings beat.
Conversely, the Sell-rated stocks (#4 or 5) should never be considered going into an earnings announcement, especially when the company is seeing negative estimate revisions.
Factors Driving the Better-Than-Expected Earnings
Torchmark has likely experienced a noticeable improvement in premiums at its Life Insurance segment owing to a better-than-expected performance across American Income Agency, Global Life Direct Response and LNL Agency. The Zacks Consensus Estimate for premiums at the Life Insurance business for the soon-to-be-reported quarter is pegged at $594 million, representing a year-over-year increase of 4.2%.
Additionally, the life insurer is expected to have displayed premium growth at its Health segment with the consensus mark pegged at $251 million, reflecting a 3.3% rise year over year. Given the probable increase in premiums across both Life Insurance and Health segments, the insurer has likely reported total premium rise in the third quarter with the metric pegged at $851 million, denoting a 3.9% improvement on a year-over-year basis.
Further, higher number of agent count has possibly driven an upside in net sales at American Income Agency, the largest contributor to life premium and net sales plus Torchmark’s most important distribution channel.
On the back of improving interest rates and higher new money rates, the company is anticipated to have reported higher excess investment income in the yet-to-be-reported quarter. Notably, the life insurer expects excess investment income to increase 6% in 2018. The Zacks Consensus Estimate for the metric stands at $216 million, translating into a 0.9% year-over-year gain.
Riding on the strength of a possible progress in premiums as well as investment results, the company has probably delivered top-line growth in the yet-to-be-reported quarter. The Zacks Consensus Estimate for the company’s revenues is pegged at $1.1 billion, representing an increase of 3.3% on a year-over-year basis.
Further, a lower tax rate and continued share buybacks are likely to have cushioned the life insurer’s bottom line in the third quarter. The consensus estimate for the metric is projected at $1.49, up 23.6% year over year.
However, higher administrative expenses, resulting from escalated pension costs, might weigh on the company’s bottom line in the quarter to be reported. The insurer estimates this metric to be up 5-6% in 2018.
Other Stocks to Consider
Some other stocks worth considering from the insurance industry with the right combination of elements to also exceed estimates this time around are as follows:
Voya Financial, Inc. (VOYA - Free Report) has an Earnings ESP of +0.93% and is a #2 Ranked player. The company is set to announce third-quarter earnings on Oct 30.
Willis Towers Watson Public Limited Company has an Earnings ESP of +2.40% and a Zacks Rank of 3. The company is set to release third-quarter earnings on Nov 2.
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Can Stronger Premiums Drive Torchmark's (TMK) Q3 Earnings?
We expect Torchmark Corporation to surpass expectations in third-quarter 2018 results after the market closes on Oct 24. Last reported quarter, the company delivered a positive earnings surprise of 1.34%.
Why a Likely Positive Surprise?
Our proven model clearly shows that Torchmark has the right combination of the following two key ingredients to beat estimates this earnings season.
Earnings ESP: Torchmark has an Earnings ESP of +0.44%. This is because the Most Accurate Estimate is pegged at $1.53, higher than the Zacks Consensus Estimate of $1.52. The positive ESP indicates a likely earnings surprise. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Torchmark Corporation Price and EPS Surprise
Torchmark Corporation Price and EPS Surprise | Torchmark Corporation Quote
Zacks Rank: Torchmark holds a Zacks Rank #2 (Buy), which increases the predictive power of ESP as stocks with a favorable Zacks Rank #1 (Strong Buy), 2 or 3 (Hold) along with a positive Earnings ESP have significantly higher chances of an earnings beat.
Conversely, the Sell-rated stocks (#4 or 5) should never be considered going into an earnings announcement, especially when the company is seeing negative estimate revisions.
Factors Driving the Better-Than-Expected Earnings
Torchmark has likely experienced a noticeable improvement in premiums at its Life Insurance segment owing to a better-than-expected performance across American Income Agency, Global Life Direct Response and LNL Agency. The Zacks Consensus Estimate for premiums at the Life Insurance business for the soon-to-be-reported quarter is pegged at $594 million, representing a year-over-year increase of 4.2%.
Additionally, the life insurer is expected to have displayed premium growth at its Health segment with the consensus mark pegged at $251 million, reflecting a 3.3% rise year over year. Given the probable increase in premiums across both Life Insurance and Health segments, the insurer has likely reported total premium rise in the third quarter with the metric pegged at $851 million, denoting a 3.9% improvement on a year-over-year basis.
Further, higher number of agent count has possibly driven an upside in net sales at American Income Agency, the largest contributor to life premium and net sales plus Torchmark’s most important distribution channel.
On the back of improving interest rates and higher new money rates, the company is anticipated to have reported higher excess investment income in the yet-to-be-reported quarter. Notably, the life insurer expects excess investment income to increase 6% in 2018. The Zacks Consensus Estimate for the metric stands at $216 million, translating into a 0.9% year-over-year gain.
Riding on the strength of a possible progress in premiums as well as investment results, the company has probably delivered top-line growth in the yet-to-be-reported quarter. The Zacks Consensus Estimate for the company’s revenues is pegged at $1.1 billion, representing an increase of 3.3% on a year-over-year basis.
Further, a lower tax rate and continued share buybacks are likely to have cushioned the life insurer’s bottom line in the third quarter. The consensus estimate for the metric is projected at $1.49, up 23.6% year over year.
However, higher administrative expenses, resulting from escalated pension costs, might weigh on the company’s bottom line in the quarter to be reported. The insurer estimates this metric to be up 5-6% in 2018.
Other Stocks to Consider
Some other stocks worth considering from the insurance industry with the right combination of elements to also exceed estimates this time around are as follows:
Everest Re Group, Ltd. is set to report third-quarter earnings on Oct 29 and has an Earnings ESP of +16.13%. The company has a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.
Voya Financial, Inc. (VOYA - Free Report) has an Earnings ESP of +0.93% and is a #2 Ranked player. The company is set to announce third-quarter earnings on Oct 30.
Willis Towers Watson Public Limited Company has an Earnings ESP of +2.40% and a Zacks Rank of 3. The company is set to release third-quarter earnings on Nov 2.
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
See the pot trades we're targeting>>