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Primerica Rises 27% in a Year: Can the Bull Run Continue?

Zacks Equity Research

Primerica, Inc. PRI stock is favored by investors, which is well corroborated by its agreeable share price movement. Shares of the company have rallied 27.3% in a year against its industry’s decrease of 8.8%. The stock also outperformed the Zacks S&P 500 Composite index’s gain of 4.3%. In fact, shares hit a 52-week high in yesterday’s trading session. With a market capitalization of $5.4 billion, the average volume of shares traded in the last three months was 0.2 million.

Primerica boasts one of the top term life insurance issuers in North America and currently carries a Zacks Rank #3 (Hold). The stock has a VGM Score of B. This helps to identify stocks with the most attractive value, growth and momentum.

 



Why Should The Bull Run Continue?

The company delivered average positive earnings surprise of 3.76% in 2018. While adjusted operating earnings per share grew 33% year over year, operating revenues improved 13%.

Primerica should continue to benefit from maximizing sales force growth and productivity, successfully catering to the demand of middle-income clients, expanding protection product offerings, increasing client investment options and developing digital capabilities. The company intends to spend additional $2-$3 million to expand digital platforms.

Adjusted return on equity (ROE), a measure of profitability, has been improving over the past many quarters. ROE of 22.6% was better than the industry average of nearly 9.5%. This reflects the company’s efficiency in utilizing shareholders’ funds. Primerica projects ROAE between 22% and 23% in 2019.

Banking on operational efficiency and diverse cash flows, this life insurer returned 78% of operating earnings in 2018. It intends to repurchase about $225 million worth of shares in 2019. It approved a 36% hike in the quarterly dividend.

Following strong 2018, the company provided solid guidance for 2019. Adjusted direct premiums are estimated to improve 11% while term life policies issued is likely to increase 3% in 2019, in-line with the longer-term growth rate. Term Life margins to hover around 18.9%.

The Zacks Consensus Estimate for earnings in 2019 calls for year-over-year growth of 10.9% on 7.8% higher revenues. For 2020, the bottom line is projected to increase 11.4% while the top line is estimated to rise 6.7%. The stock carries a favorable Growth Score of B. This style score analyzes growth prospects of a company.

Primerica belongs to the Zacks Life Insurance industry, which is currently in the top 25% of the Zacks Industry Rank.

Stocks to Consider

Some better-ranked life insurers are Health Insurance Innovations Inc. HIIQ, Reinsurance Group of America, Incorporated RGA and Voya Financial, Inc. VOYA.

Health Insurance Innovations operates as a cloud-based technology platform, and distributor of individual and family health insurance plans, and supplemental products in the United States. The company delivered a 27.27% positive surprise in the last reported quarter. It currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Reinsurance Group of America offers individual, and group life and health insurance products. The company delivered a 2.06% positive surprise in the last reported quarter. It currently carries a Zacks Rank #2 (Buy).

Voya Financial operates as a retirement, investment and insurance company in the United States. It recorded an 8.20% positive surprise in the last reported quarter. It presently carries a Zacks Rank #2.

Zacks' Top 10 Stocks for 2019

In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-holds for the year?

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