What's in Store for Torchmark (TMK) this Earnings Season?
Torchmark Corporation TMK is slated to report first-quarter 2017 results on Apr 19, after the market closes. Last quarter, the company had a positive earnings surprise of 3.57%. Let’s see how things are shaping up for this announcement.
Factors to be Considered this Quarter
Torchmark is likely to report bottom-line growth in the first quarter on the back of higher premiums from the Life and Health segments. Notably, the company projects net operating income from continuing operations per share between $4.57 and $4.77 in 2017. The $4.67 per share midpoint reflects a decrease of 3 cents from the midpoint of the life insurer’s previous guidance.
Further, the company is anticipated to witness an improvement in life premiums, life underwriting margins as well as life sales at American Life. The expected increase may be primarily attributable to increased agent count. For 2017, the company expects producing agent count between 7,100 and 7,400.
Moreover, the company is optimistic about Liberty National’s prospects. In fact, the life insurer is likely to witness improved life net sales as well as health net sales in the first quarter. For 2017, Torchmark projects life net sales growth in the range of 8–12% and health net sales improvement in the band of 5–9%.
Also, Torchmark might have experienced increased health premiums and improved health underwriting margin at Family Heritage in the quarter. Notably, the company anticipates health sales in this segment to grow between 3% and 7% in 2017.
However, the company is likely to experience higher administrative expenses in the first quarter, mainly driven by higher pension costs due to the required implementation of a new mortality table and further investments in IT systems. For 2017, the company anticipates administrative expenses to increase 5% and be around 6.3% of premium.
In addition, the company is likely to report a rise in total benefits and expenses in the first quarter.
With respect to the surprise trend, the company delivered positive surprises in all of the last four quarters, with an average beat of 2.02%.
Torchmark Corporation Price and EPS Surprise
Torchmark Corporation Price and EPS Surprise | Torchmark Corporation Quote
Earnings Whispers
Our proven model does not conclusively show that Torchmark is likely to beat on earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here as you will see below.
Zacks ESP: Torchmark has an Earnings ESP of 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate stand at $1.14. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.
Zacks Rank: Torchmark carries a Zacks Rank #3. Though a favorable Zacks Rank increases the predictive power of ESP, we need a positive Earnings ESP to be confident about an earnings beat.
We caution against Sell-rated stocks (Zacks Rank #4 or 5) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks to Consider
Here are some companies from the insurance industry that you may want to consider as these have the right combination of elements to post an earnings beat this quarter:
Everest Re Group, Ltd. RE, which is set to report first-quarter earnings on Apr 24, has an Earnings ESP of +2.47% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.
Chubb Limited CB has an Earnings ESP of +0.82% and a Zacks Rank #3. The company is set to report first-quarter earnings on Apr 25.
Reinsurance Group of America, Incorporated RGA has an Earnings ESP of +1.42% and a Zacks Rank #2. The company is slated to report first-quarter earnings on Apr 27.
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Torchmark Corporation (TMK): Free Stock Analysis Report
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