On Dec 20, 2013, shares of Protective Life Corp. (PL) hit a 52-week high of $50.86. The momentum was driven by the company’s strong operating results so far this year, backed by a steady financial profile and closing of MONY acquisition.
Protective Life has shown strong operating results for all three quarters of the year, with an average earnings surprise of 2.83%. The company is benefiting from strong life sales in its life and annuity business.
In addition, the recently closed acquisition of MONY Life Insurance Company will also aid the company earnings by 10 to 15 cents per share. The acquisition will expand Protective Life’s life insurance portfolio and enhance its market share.
A gradually recovering economy and an increasing interest rate environment also bode well for the company.
This Zacks Rank #3 (Hold) life insurer boasts of solid asset quality, and overall sound capital position, liquidity and financial flexibility, which drives credit rating agencies to give it a strong credit score.
Protective Life has also witnessed an uptick in its Zacks Consensus Estimates. Over the past 60 days, 5 of 10 estimates moved north by 0.5% to $3.95 per share. The same for 2014 went up 1.1% to $4.74 per share as 4 of 10 estimates were raised. The expected long term growth rate for the stock is about 10%.
Valuation for Protective Life looks reasonable. The shares are trading at 11.2% discount to the industry average on a forward price-to-earnings basis and 30% discount to a price-to-book basis. Return on equity is 7.5% lower than the peer group average. However, the year-to-date return from the stock was 76.8%, much above the S&P’s return of 27.5%.
Other better ranked stocks in the life insurance industry include StanCorp Financial Group Inc. (SFG), American Equity Investment Life Holding Co. (AEL), and Manulife Financial Corporation (MFC). While StanCorp Financial sports Zacks Rank #1 (Strong Buy). American Equity and Manulife Financial carry Zacks Rank #2 (Buy).
Read the Full Research Report on MFC
Read the Full Research Report on AEL
Read the Full Research Report on PL
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