Globe Life (GL) Up 0.3% Since Last Earnings Report: Can It Continue?
A month has gone by since the last earnings report for Globe Life (GL). Shares have added about 0.3% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Globe Life due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Globe Life Q2 Earnings Top Estimates, Premiums Rise Y/Y
Globe Life Inc.’s second-quarter 2023 net operating income of $2.61 per share beat the Zacks Consensus Estimate by 1.5%. The bottom line improved 2.7% year over year, primarily driven by higher excess investment income.
Behind the Headlines
Globe Life reported total premium revenues of $1.1 billion, up 3% year over year. This upside was primarily driven by higher premiums from Life and Health insurance.
Net investment income increased 7% year over year to $261 million.
The company reported operating revenues of $1.3 billion, up 3.8% from the year-ago quarter. The improvement was driven by growth in Life and Health insurance premiums and higher net investment income. The top line matched the Zacks Consensus Estimate.
Excess investment income, a measure of profitability, increased 30% year over year to $31.3 million. Total insurance underwriting income decreased 2% year over year to $315 million. The decrease was due to lower Life and Annuity underwriting income.
Administrative expenses were up 2% year over year to $75.4 million.
Total benefits and expenses increased 4.6% year over year to $1 billion, primarily due to higher total policyholder benefits, amortization of deferred acquisition costs, commissions, premium taxes and non-deferred acquisition costs and interest expense.
Segmental Results
Premium revenues at Life increased 3% year over year to $782 million, driven by higher premiums written by distribution channels like American Income, Direct to Consumer and Liberty National. American Income grew 5%, Direct to Consumer increased 1% and Liberty National gained 7%.
Net sales of $139.2 million remained flat year over year. Underwriting margins decreased 1% year over year to $296 million. Health insurance premium revenues rose 3% year over year to $329.2 million, primarily driven by higher premiums from United American and Family Heritage. Net health sales increased 12% year over year to $49.4 million. Underwriting margins increased 1% year over year to $92.4 million.
Financial Update
Shareholders’ equity, excluding accumulated other comprehensive income (AOCI), as of Jun 30, 2023, increased 7.4% year over year to $6.92 billion.
As of Jun 30, 2023, Globe Life reported book value per share, excluding AOCI, of $72.09, up 9.8% year over year.Operating return on equity, excluding AOCI, was 14.6% in the reported quarter, which contracted 100 basis points year over year.
Share Repurchase
Globe Life repurchased 0.7 million shares worth $83 million in the reported quarter.
2023 View
GL estimates net operating income between $10.37 per share and $10.57 per share for the year ending Dec 31, 2023.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended upward during the past month.
VGM Scores
At this time, Globe Life has a subpar Growth Score of D, a grade with the same score on the momentum front. However, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions has been net zero. It comes with little surprise Globe Life has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Globe Life Inc. (GL) : Free Stock Analysis Report
