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Globe Life Rides on Rising Premiums, Solid Capital Position

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Globe Life Inc. (GL - Free Report) is well-poised for growth, benefitting from higher premium revenues from its life and health businesses along with a robust capital position.

The company has a decent surprise history. It surpassed estimates in three of the trailing four quarters, with a beat of 1.2%, on average. In the past year, its shares have gained 16.6% against the industry’s decline of 6.4%.

 

 

What’s Driving Globe Life?

The company continues to perform well on strong performance of its two revenue components — life premium and health premium.  Life premium, which contributes a significant portion to Globe Life’s revenues, moved up 4.6% year over year in 2019. The upside can be attributed to consistent performance at one of its most important distribution channels — American Income Exclusive Agency.

The company also seems to witness a substantial improvement in health premiums. In 2019, health premiums increased 6.1% from the prior year. The improvement mainly came on the back of strong performance in Globe Life’s United American Independent distribution channel.

The company has a long history of returning capital to shareholders. It has been actively increasing shareholders’ wealth through an ongoing buyback program since initiating it in 1986.

Globe Life has also been generating free cash flow consistently. Riding on solid cash flow, the company engages in share buybacks. However, rise in administrative expenses due to increased pension costs is a significant headwind for Globe Life.

Zacks Rank & Stocks to Consider

Globe Life currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the same space are PRA Group, Inc. (PRAA - Free Report) , Houlihan Lokey, Inc. (HLI - Free Report) and Moody's Corporation (MCO - Free Report) . While PRA Group currently sports a Zacks Rank #1 (Strong Buy), Houlihan and Moody’s carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

All three companies surpassed estimates in the last reported quarters by 20%, 18.92% and 4.17%, respectively.

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