What Is Primerica, Inc.’s (NYSE:PRI) Share Price Doing?
Primerica, Inc. (NYSE:PRI), which is in the insurance business, and is based in United States, saw significant share price movement during recent months on the NYSE, rising to highs of $127.7 and falling to the lows of $97.42. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether Primerica’s current trading price of $97.42 reflective of the actual value of the mid-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Primerica’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.
See our latest analysis for Primerica
What is Primerica worth?
According to my relative valuation model, the stock seems to be currently fairly priced. In this instance, I’ve used the price-to-earnings (PE) ratio given that there is not enough information to reliably forecast the stock’s cash flows. I find that Primerica’s ratio of 10.69x is trading slightly below its industry peers’ ratio of 13.21x, which means if you buy Primerica today, you’d be paying a reasonable price for it. And if you believe that Primerica should be trading at this level in the long run, then there’s not much of an upside to gain from mispricing. Is there another opportunity to buy low in the future? Since Primerica’s share price is quite volatile, we could potentially see it sink lower (or rise higher) in the future, giving us another chance to buy. This is based on its high beta, which is a good indicator for how much the stock moves relative to the rest of the market.
Can we expect growth from Primerica?
Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company’s future expectations. However, with a negative profit growth of -15% expected next year, near-term growth certainly doesn’t appear to be a driver for a buy decision for Primerica. This certainty tips the risk-return scale towards higher risk.
What this means for you:
Are you a shareholder? Currently, PRI appears to be trading around its fair value, but given the uncertainty from negative returns in the future, this could be the right time to reduce the risk in your portfolio. Is your current exposure to the stock optimal for your total portfolio? And is the opportunity cost of holding a negative-outlook stock too high? Before you make a decision on PRI, take a look at whether its fundamentals have changed.
Are you a potential investor? If you’ve been keeping an eye on PRI for a while, now may not be the most optimal time to buy, given it is trading around its fair value. The price seems to be trading at fair value, which means there’s less benefit from mispricing. Furthermore, the negative growth outlook increases the risk of holding the stock. However, there are also other important factors we haven’t considered today, which can help gel your views on PRI should the price fluctuate below its true value.
Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on Primerica. You can find everything you need to know about Primerica in the latest infographic research report. If you are no longer interested in Primerica, you can use our free platform to see my list of over 50 other stocks with a high growth potential.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.
