Torchmark Corporation (TMK - Free Report) provides annuities, whole and term-life insurance, accidental death insurance, health insurance, Medicare supplements and long-term healthcare policies.
The stock’s Zacks Consensus Estimate for both current and next-year earnings has been revised a cent upward over the last 60 days. While 2018 estimates moved north by 5.6%, consensus mark for 2019 moved up 0.5%. This reflects analysts’ confidence in the stock.
Moreover, shares of this Zacks Rank #3 (Hold) life insurer have gained 9.9% in a year, outperforming the industry’s growth of 3.7%. Torchmark carries a VGM Score of B. Here V stands for Value, G for Growth and M for Momentum with the score being a weighted combination of all three factors.
Let’s focus on some factors that make Torchmark a stock to hold on to for greater returns.
Continued Superior Performance at American Income: Torchmark’s most important distribution channel — American Income Exclusive Agency — has been witnessing improved life premiums over the last several quarters. The company expects life sales to grow between 6% and 10% in 2018.
Improving Excess Investment Income: Excess investment income have been improving since the third quarter of 2016. Courtesy the rising interest rate environment and higher new money rates, we expect the trend to continue. In 2018, the company anticipates excess investment income to grow about 3%. On a per share basis, Torchmark expects excess investment income to increase in the range of 6-7% in 2018.
Solid Guidance: Torchmark expects net operating income between $5.90 and $6.10 per share in 2018. Life underwriting income is likely to grow 4-5% while health underwriting income will rise in the range of 3-5%.
Intelligent Capital Management: Torchmark can be considered a shareholder-friendly company as by virtue of its intelligent capital management strategy, it has generated 83% returns for its investors over the past 10 years. The company has already bought back $26.8 million worth shares in 2018. Also, with about 6.7% increase in quarterly dividend approved in February 2018, the company’s dividend has witnessed a four-year CAGR of 17.5%.
Solid Earnings Surprise History: Torchmark has surpassed the Zacks Consensus Estimate in each of the last eight quarters with an average beat of 1.75%.
Growth Projections: The Zacks Consensus Estimate for current-year earnings per share is pegged at $6.03 on revenues of $4.3 billion, representing year-over-year top-line and bottom-line improvement of 4.5% and 25.1%, respectively.
For 2019, the Zacks Consensus Estimate for earnings per share stands at $6.51 on revenues of $4.5 billion, representing a year-over-year increase of nearly 8% and 4.5%, respectively.
Torchmark has expected long-term earnings per share growth of 7.2%.
Underpriced: Looking at the company’s price-to-book ratio — the best multiple for valuing insurers because of large variations in their earnings results from one quarter to the next — shares are underpriced at the current level. The company has a trailing 12-month P/B ratio of 1.6, falling below the industry average of 3.8.
Stocks to Consider
Some better-ranked life insurance stocks are Primerica, Inc. (PRI - Free Report) , American Equity Investment Life Holding Company (AEL - Free Report) and Health Insurance Innovations, Inc. (HIIQ - Free Report) .
Primerica distributes financial products to middle-income households in the United States and Canada. The company delivered an average four-quarter positive surprise of 3.74%. The stock sports Zacks Rank #1 (Strong Buy).
American Equity Investment develops and sells fixed index and fixed rate annuity products in the United States. The company came up with an average four-quarter positive surprise of 27.23%. The stock carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Health Insurance Innovations operates as a cloud-based technology platform and distributor of individual and family health insurance plans, and supplemental products in the United States. It pulled off a four-quarter average beat of 19.14%. The stock carries a Zacks Rank of 2.
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