Here's Why You Should Invest in Primerica (PRI) Stock Now
Primerica Inc.’s PRI distribution channel, strong agent force, market presence and solid capital position make it worth adding to one’s portfolio.
Earnings of this second-largest issuer of term-life insurance coverage in North America have risen 14.4% over the last five years, outperforming the industry’s average of 2.6%.
Zacks Rank & Price Performance
Primerica currently carries a Zacks Rank #2 (Buy). Year to date, the stock has gained 39.6% compared with the industry’s growth of 8.4%.
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Return on Equity
Return on equity (ROE), a profitability measure to identify how efficiently a company is utilizing its shareholders’ funds, has been improving over the last several years. PRI’s trailing 12-month ROE of 27.5% is better than the industry’s average of 12.4%.
Style Score
Primerica has a VGM Score of A. This style score helps identify stocks with the most attractive value, best growth, and most promising momentum.
Rising Estimates
The Zacks Consensus Estimate for PRI’s 2023 earnings is pegged at $15.33 per share, indicating a 34% increase on 4.5% higher revenues of $2.9 billion.
The consensus estimate for 2024 earnings is pegged at $17.09, indicating an increase of 11.5% on 5.3% higher revenues of $3 billion.
The company beat earnings estimates in three of the last four quarters, missed once, the average surprise being 3.8%.
Key Drivers
Primerica should gain from strong demand for protection products that drive sales growth and policy persistence. A strong business model makes it well-poised to cater to the middle market's increased demand for financial security. Thus, Primerica envisions being a successful senior health business while continuing to enhance its shareholders’ value.
The insurer stays focused on increasing the size of the life license sales force through continued recruiting and licensing. PRI anticipates a 3% rise in sales force size in 2023. Licensed representatives play a pivotal role in driving operational results for PRI.
PRI expects Term Life insurance issued policy growth in the mid-single digit in 2023. The company noted that new rate classes through new products should accelerate growth, and inflationary pressure will weigh on the upside.
In Investment and Savings Products, the insurer’s first-quarter 2023 sales declined 25% year over year. Current market volatility is expected to harm sales and client asset values.
Life insurers are direct beneficiaries of an improving interest-rate environment. The Fed raised interest rates seven times in 2022 and twice so far in 2023, with more on the horizon this year. The Federal Open Market Committee indicated its intention to carry on with two more rate hikes in 2023. Thus, an improving interest rate environment should aid net investment income.
While the insurer has solid liquidity, Primerica has been strengthening its balance sheet by improving its leverage ratio. PRI scores strongly with credit rating agencies. The company repurchased $85 million worth of shares and paid dividends worth $24 million in the first quarter of 2023.
However, the company is exposed to foreign currency risks. Its Canadian operations’ functional currency is the Canadian dollar, and PRI translates all the balance sheet and income statement amounts to U.S. dollars. An increase or a decrease in U.S. dollars per Canadian dollar exchange rate should affect the consolidated results positively and negatively, respectively.
Other Stocks to Consider
Some other top-ranked stocks from the insurance industry are Assurant, Inc. AIZ, HCI Group, Inc. HCI and RLI Corp. RLI. Each of these companies presently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Assurant delivered a four-quarter average earnings surprise of 10%. Year to date, AIZ has gained 0.6%.
The Zacks Consensus Estimate for AIZ’s 2023 and 2024 earnings implies year-over-year increases of 3.7% and 21.5%, respectively.
HCI Group delivered a four-quarter average earnings surprise of 308.8%. Year to date, HCI has risen 56.6%.
The Zacks Consensus Estimate for HCI’s 2023 earnings indicates a year-over-year increase of 149.3%.
RLI delivered a four-quarter average earnings surprise of 43.5%. Year to date, the insurer has gained 3.8%.
The Zacks Consensus Estimate for RLI’s 2023 and 2024 earnings indicates a year-over-year increase of 7.9% and 3.9%, respectively.
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RLI Corp. (RLI) : Free Stock Analysis Report
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HCI Group, Inc. (HCI) : Free Stock Analysis Report
