Globe Life (GL) Up 1.8% 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 1.8% in that time frame, underperforming 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 its most recent earnings report in order to get a better handle on the important catalysts.
Globe Life Q4 Earnings Beat on Solid Investment Income
Globe Life Inc.’s fourth-quarter 2023 net operating income of $2.80 per share beat the Zacks Consensus Estimate by 2.2%. The bottom line improved 10% year over year, primarily driven by higher excess investment income and insurance underwriting income.
The company reported operating revenues of $1.4 billion, up 4.2% 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 beat the Zacks Consensus Estimate by 0.2%.
The strong quarterly results of Globe Life were supported by improving insurance underwriting income, higher net investment income and premiums in the Life and Health segments. Higher expenses partially offset the upside.
Behind the Headlines
Globe Life reported total premium revenues of $1.13 billion, up 4% year over year. This upside was primarily driven by higher premiums from Life and Health insurance. Net investment income increased 6% year over year to $271.6 million.
Excess investment income, a measure of profitability, increased 17% year over year to $35.8 million. Total insurance underwriting income increased 4% year over year to $327.8 million. The increase was due to improved Life underwriting income.
Administrative expenses were down 1% year over year to $77.2 million. Total benefits and expenses increased 3.9% year over year to $1.01 billion, primarily due to higher total policyholder benefits, amortization of deferred acquisition costs, commissions, premium taxes, and non-deferred acquisition costs and interest expenses.
Segmental Results
Premium revenues at Life increased 4% year over year to $794.8 million, driven by higher premiums written by distribution channels like American Income and Liberty National Division. American Income grew 7% and Liberty National gained 8%. Net sales of $130.4 million increased 3% year over year. Underwriting margins improved 4.3% year over year to $305.5 million.
Health insurance premium revenues rose 3% year over year to $335.8 million, primarily driven by higher premiums from Family Heritage, Liberty National and American Income. Net health sales increased 21% year over year to $69.2 million. Underwriting margins rose 1.3% year over year to $97.5 million.
Financial Update
Shareholders’ equity, excluding accumulated other comprehensive income (AOCI), as of Dec 31, 2023, increased 7.7% year over year to $7.25 billion.
As of Dec 31, 2023, Globe Life reported book value per share, excluding AOCI, of $76.21, up 11.5% year over year. Operating return on equity, excluding AOCI, was 14.7% in the reported quarter, which contracted 10 basis points year over year.
Share Repurchase
Globe Life repurchased 0.66 million shares worth $77 million in the reported quarter.
Full-Year Highlights
Full-year 2023 net operating income of $10.65 increased 10% year over year. Total revenues rose 3.9% from the year-ago quarter to $5.5 billion.
2024 View
GL estimates net operating income in the range of $11.30-$11.80 per diluted common share for the year ending Dec 31, 2024.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision 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 second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. 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.
Performance of an Industry Player
Globe Life belongs to the Zacks Financial - Miscellaneous Services industry. Another stock from the same industry, Virtu Financial (VIRT), has gained 14.5% over the past month. More than a month has passed since the company reported results for the quarter ended December 2023.
Virtu Financial reported revenues of $260.91 million in the last reported quarter, representing a year-over-year change of -4.8%. EPS of $0.27 for the same period compares with $0.37 a year ago.
Virtu Financial is expected to post earnings of $0.54 per share for the current quarter, representing a year-over-year change of -27%. Over the last 30 days, the Zacks Consensus Estimate has changed -3.5%.
Virtu Financial has a Zacks Rank #5 (Strong Sell) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of C.
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Globe Life Inc. (GL) : Free Stock Analysis Report
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