It has been about a month since the last earnings report for Globe Life (
GL Quick Quote GL - Free Report) . Shares have lost about 2% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Globe Life due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Globe Life Q1 Earnings Beat, Revenues Miss Estimates
Globe Life’s first-quarter 2023 net operating income of $2.53 per share beat the Zacks Consensus Estimate by 2.4%. The bottom line improved 4.1% year over year, primarily driven by higher Insurance underwriting income and excess investment income.
Behind the Headlines
Globe Life reported total premium revenues of $1 billion, up 3% year over year. This upside was primarily driven by higher premiums from Life and Health insurance.
Net investment income increased 5% year over year to $257 million.
The company reported operating revenues of $1.3 billion, up 3.3% from the year-ago quarter. The improvement was driven by growth in Life and Health insurance premiums and higher net investment income. The top line however missed the Zacks Consensus Estimate by 0.8%.
Excess investment income, a measure of profitability, increased 13% year over year to $29.2 million.
Total insurance underwriting income increased 1% year over year to $311 million. The increase was attributable to higher Life, Annuity and Health underwriting income.
Administrative expenses were up 2% year over year to $73.9 million.
Total benefits and expenses increased 3.8% year over year to $1 billion, primarily due to higher total policyholder benefits, amortization of deferred acquisition costs, commissions, premium taxes and non-deferred acquisition costs and interest expense.
Premium revenues at Life increased 3% year over year to $772 million, driven by higher premiums written by distribution channels like American Income, Direct to Consumer and Liberty National. American Income grew 5%, Direct to Consumer increased 1% and Liberty National gained 6%.
Net sales of $140.4 million increased 1% on a year-over-year basis. Underwriting margins increased 1% year over year to $291.3 million.
Health insurance premium revenues rose 2% year over year to $322 million, primarily driven by higher premiums from United American, American Income and Family Heritage. Net health sales increased 17% year over year to $50 million. Underwriting margins increased 4% year over year to $91.3 million.
Shareholders’ equity, excluding accumulated other comprehensive income (AOCI), as of Mar 31, 2023, increased 6.8% year over year to $6.8 billion.
As of Mar 31, 2023, Globe Life reported book value per share, excluding AOCI, of $70.34, up 10% year over year.
Operating return on equity, excluding AOCI, was 14.6% in the reported quarter, reflecting an expansion of 80 basis points year over year.
Globe Life repurchased 1.2 million shares worth $135 million in the reported quarter.
New accounting guidance related to long-duration insurance contracts became effective on Jan 1, 2023. Under this new requirement, Globe Life estimates net operating income between $10.28 per share and $10.52 per share for the year ending Dec 31, 2023.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision flatlined during the past month.
At this time, Globe Life has a strong Growth Score of A, though it is lagging a bit on the Momentum Score front with a B. Following the exact same course, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Globe Life has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
Globe Life is part of the Zacks Financial - Miscellaneous Services industry. Over the past month, Virtu Financial (
VIRT Quick Quote VIRT - Free Report) , a stock from the same industry, has gained 4.7%. The company reported its results for the quarter ended March 2023 more than a month ago.
Virtu Financial reported revenues of $373.08 million in the last reported quarter, representing a year-over-year change of -26.1%. EPS of $0.74 for the same period compares with $1.27 a year ago.
For the current quarter, Virtu Financial is expected to post earnings of $0.57 per share, indicating a change of -21.9% from the year-ago quarter. The Zacks Consensus Estimate has changed -0.4% over the last 30 days.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for Virtu Financial. Also, the stock has a VGM Score of D.