It has been about a month since the last earnings report for Torchmark Corporation . Shares have added about 5.7% in that time frame, outperforming the market.
Will the recent positive trend continue leading up to the stock's next earnings release, or is it due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Torchmark Q4 Earnings Top, Revenues Lag Estimates
Torchmark Corporation's fourth-quarter 2016 net operating income of $1.16 per share beat the Zacks Consensus Estimate of $1.12 by 3.6%. Earnings also improved 10.5% year over year on the back of higher premiums from the Life and Health segments. Lower share count due to continuous buy backs also drove the upside.
Including net income from discontinued operations of $0.01 per share, realized losses on investments from continuing operations of $0.10 per share, favorable Medicare Part D adjustment of $0.07 per share and administrative settlements of $0.02 per share, net income grew 4.7% year over year to $1.12 per share.
Behind the Headlines
Torchmark reported total premium revenue of $788 million, up 4.2% year over year. The upside was primarily driven by higher premiums from Life and Health Insurance businesses.
Net investment income increased 6% year over year to $205.5 million.
The company’s total revenue of $993 million increased 4.5% from year-ago quarter. The increase in revenues was driven by growth in Life and Health Insurance premiums along with higher net investment income. However, the top line missed the Zacks Consensus Estimate of $996 million.
Excess investment income, a measure of profitability, grew 8% year over year to $58 million.
Torchmark’s total insurance underwriting income was down 0.4% year over year to $148.7 million. Lower underwriting income in the Life segment primarily resulted in the downside.
Administrative expenses increased 6% year over year to $50 million.
Total benefits and expenses rose 5.4% year over year to $799 million.
2016 Highlights
Operating income was $4.49 per share, up 8.7% from 2015. Operating revenues of $3.9 billion increased 2.6% year over year.
Segment Update
Premium revenues at Torchmark's Life Insurance operations increased 6% year over year to $550.2 million. The improvement can be attributed to higher premiums written by the distribution channels – American Income Agency and Direct Response. American Income Agency grew 10%, while Direct Response inched up 4%. Life Insurance underwriting income, however, dipped 1% year over year to $142.7 million. Net sales at the life insurance segment was flat year over year.
Health Insurance premium revenues rose 1% year over year to $237.7 million, while underwriting income of $52.8 million increased 4% year over year. Net health decreased 21% year over year.
Financial Update
Shareholders’ equity as of Dec 31, 2016 climbed 4.1% year over year to $3.9 billion.
Torchmark reported book value per share (excluding net unrealized gains on fixed maturities) of $32.13, up 6.8% year over year.
As of Dec 31, 2016, return on equity was 14.6% compared with 14.5% as of Dec 31, 2015.
Share Repurchase and Dividend Update
In 2016, Torchmark repurchased 5.2 million shares for a total cost of $311 million.
The company declared a dividend of 14 cents per share in the quarter, up by a cent from year-ago quarter.
Guidance
Torchmark projects full-year 2017 operating income per share in the range of $4.57–$4.77.
How Have Estimates Been Moving Since Then?
Analysts were quiet during the last one month period as none of them issued any earnings estimate revisions
VGM Scores
At this time, Torchmark's stock has an average Growth Score of 'C', however its Momentum is doing a bit better with a 'B'. Following the exact same course, the stock was allocated also a grade of 'B' on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of 'B'. If you aren't focused on one strategy, this score is the one you should be interested in.
Based on our scores, the stock is more suitable for value and momentum investors than growth investors.
Outlook
The stock has a Zacks Rank #4 (Sell). We are looking for a below average return from the stock in the next few months.
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Torchmark (TMK) Up 5.7% Since Earnings Report: Can It Continue?
It has been about a month since the last earnings report for Torchmark Corporation . Shares have added about 5.7% in that time frame, outperforming the market.
Will the recent positive trend continue leading up to the stock's next earnings release, or is it due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Torchmark Q4 Earnings Top, Revenues Lag Estimates
Torchmark Corporation's fourth-quarter 2016 net operating income of $1.16 per share beat the Zacks Consensus Estimate of $1.12 by 3.6%. Earnings also improved 10.5% year over year on the back of higher premiums from the Life and Health segments. Lower share count due to continuous buy backs also drove the upside.
Including net income from discontinued operations of $0.01 per share, realized losses on investments from continuing operations of $0.10 per share, favorable Medicare Part D adjustment of $0.07 per share and administrative settlements of $0.02 per share, net income grew 4.7% year over year to $1.12 per share.
Behind the Headlines
Torchmark reported total premium revenue of $788 million, up 4.2% year over year. The upside was primarily driven by higher premiums from Life and Health Insurance businesses.
Net investment income increased 6% year over year to $205.5 million.
The company’s total revenue of $993 million increased 4.5% from year-ago quarter. The increase in revenues was driven by growth in Life and Health Insurance premiums along with higher net investment income. However, the top line missed the Zacks Consensus Estimate of $996 million.
Excess investment income, a measure of profitability, grew 8% year over year to $58 million.
Torchmark’s total insurance underwriting income was down 0.4% year over year to $148.7 million. Lower underwriting income in the Life segment primarily resulted in the downside.
Administrative expenses increased 6% year over year to $50 million.
Total benefits and expenses rose 5.4% year over year to $799 million.
2016 Highlights
Operating income was $4.49 per share, up 8.7% from 2015. Operating revenues of $3.9 billion increased 2.6% year over year.
Segment Update
Premium revenues at Torchmark's Life Insurance operations increased 6% year over year to $550.2 million. The improvement can be attributed to higher premiums written by the distribution channels – American Income Agency and Direct Response. American Income Agency grew 10%, while Direct Response inched up 4%. Life Insurance underwriting income, however, dipped 1% year over year to $142.7 million. Net sales at the life insurance segment was flat year over year.
Health Insurance premium revenues rose 1% year over year to $237.7 million, while underwriting income of $52.8 million increased 4% year over year. Net health decreased 21% year over year.
Financial Update
Shareholders’ equity as of Dec 31, 2016 climbed 4.1% year over year to $3.9 billion.
Torchmark reported book value per share (excluding net unrealized gains on fixed maturities) of $32.13, up 6.8% year over year.
As of Dec 31, 2016, return on equity was 14.6% compared with 14.5% as of Dec 31, 2015.
Share Repurchase and Dividend Update
In 2016, Torchmark repurchased 5.2 million shares for a total cost of $311 million.
The company declared a dividend of 14 cents per share in the quarter, up by a cent from year-ago quarter.
Guidance
Torchmark projects full-year 2017 operating income per share in the range of $4.57–$4.77.
How Have Estimates Been Moving Since Then?
Analysts were quiet during the last one month period as none of them issued any earnings estimate revisions
Torchmark Corporation Price and Consensus
Torchmark Corporation Price and Consensus | Torchmark Corporation Quote
VGM Scores
At this time, Torchmark's stock has an average Growth Score of 'C', however its Momentum is doing a bit better with a 'B'. Following the exact same course, the stock was allocated also a grade of 'B' on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of 'B'. If you aren't focused on one strategy, this score is the one you should be interested in.
Based on our scores, the stock is more suitable for value and momentum investors than growth investors.
Outlook
The stock has a Zacks Rank #4 (Sell). We are looking for a below average return from the stock in the next few months.