Torchmark Corporation TMK is poised for long-term growth on the back of its strong segmental performance, niche market focus, solid capital position and effective capital deployment. Torchmark projects net operating income between $6.45 and $6.75 in 2019.
The Zacks Consensus Estimate for 2019 earnings is pegged at $6.62, up 7.9% on 29% higher revenues. The company’s expected long-term earnings growth is pegged at 13.7%.
Strong businesses at the company’s both Life and Health Insurance operations should continue to drive premiums.
Also, the company has been increasing its producing agent count to ramp up product sales. Torchmark expects producing agent count for 2019 to increase 1-7% at American Income, 0-7% at Liberty National and 1-5% at Family Heritage over 2018 level. Agent training programs and financial incentives should help improve agent retention and sales activity, hence fortifying premium base.
Net sales in 2019 are expected to improve 3-7% at American Income, 4-8% at Liberty National and 5-9%.at Family Heritage.
Also, an improving interest rate environment should be a boon for life insurers. Life insurers invest a big chunk of the premiums so that they have enough funds at the time of claims payments or upon maturity. As a rising rate environment helps life insures reinvest funds at higher rates, their investment income increases.
A sustained operational performance should continue to help maintain a solid capital position. Its prudent capital deployment has generated more than 80% returns for its investors over the past 10 years.
Shares of this Zacks Rank #2 (Buy) life insurer have lost 15.6% in a year compared with the industry’s 28.9% decrease. Nevertheless, its valuation looks attractive at the current level as the price-to-book multiple of 1.54 is lower than the industry average of 1.65. Undervalued stocks with solid fundamentals are best investment bets.
Also, the stock has an impressive Value Score of A. Value Score helps to find undervalued stocks. Back-tested results show that stocks with a favorable Value Score of A or B coupled with a solid Zacks Rank #1 (Strong Buy) and 2 offer the best investment opportunity.
Other Stocks to Consider
Investors interested in the insurance space can look at American Equity Investment Life Holding Co. AEL, Athene Holding Ltd. ATH and Manulife Financial Corp. MFC. Each of the stocks carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.
American Equity Investment provides life insurance products and services in the United States. The company delivered 13.79% positive surprise in the last reported quarter.
Athene Holding, a retirement services company, issues, reinsures and acquires retirement savings products in the United States, the District of Columbia and Germany. The company delivered a 14.71% positive surprise in the last reported quarter.
Manulife Financial provides financial advice, insurance, and wealth and asset management solutions for individuals, groups, and institutions in Asia, Canada, and the United States. It came up with a 14.0% positive surprise in the last reported quarter.
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