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Category: Stock Market and Primerica Inc.
Date: 12 February 2020 Stock Price: $130.28 We take a look at the 4th quarter earnings report of their 2019 fiscal year of Primerica, a provider of financial services to middle-income households in North America with over 5 million lives insured and approximately 2.5 million client investment accounts.
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About Primerica
Primerica, Inc., headquartered in Duluth, GA, is a leading provider of financial services to middle-income households in North America. Independent licensed representatives educate Primerica clients about how to better prepare for a more secure financial future by assessing their needs and providing appropriate solutions through term life insurance, which we underwrite, and mutual funds, annuities and other financial products, which we distribute primarily on behalf of third parties. We insured over 5 million lives and had approximately 2.5 million client investment accounts at December 31, 2019. Primerica, through its insurance company subsidiaries, was the #2 issuer of Term Life insurance coverage in North America in 2018. Primerica stock is included in the S&P MidCap 400 and the Russell 1000 stock indices and is traded on The New York Stock Exchange under the symbol “PRI”.
Overview of Primerica's 4th quarter 2019 earnings report
The data below refers to the latest quarter's data (unless specified otherwise)
- Net revenues: $531.960 million (up from $487.325 million for the same quarter of the previous year)
- Net revenues increased by 9.15% over the last 12 months
- Total benefits and expenses: $409.815 million (up from $379.403 million for the same quarter of the previous year)
- Total benefits and expenses increased by 8.01% over the last 12 months
- Net income: $93.557 million (up from $86.541 million for the same quarter of the previous year)
- Diluted earnings per share: $2.24 (up from $1.99 for the same quarter of the previous year)
- PE ratio of Primerica: 15.1
- Number of shares in issue: 41.614 million (down from 43.311 million for the same quarter of the previous year)
- Cash and cash equivalents: $256.876 million
- Cash and cash equivalents per share: $6.17
- Cash and cash equivalents makes up 4.7% of Primerica' market capital
- Cash and cash equivalents makes up 1.87% of Primerica' total assets
- Stockholders equity in Primerica: $1.652 billion
- Stockholders equity per share: $39.69
- So Primerica is trading at 3.28 times its stockholders equity per share which is well within the expected range of between 2 and 4 times that most firms tend to trade at.
Primerica (NYSE: PRI) management commentary on 4th quarter 2019 earnings
DULUTH, Ga.--(BUSINESS WIRE)-- Primerica, Inc. (NYSE: PRI) today announced financial results for the quarter ended December 31, 2019. Total revenues of $532.0 million increased 9% compared to the fourth quarter of 2018. Net income of $93.6 million increased 8%, while earnings per diluted share of $2.24 increased 13% compared to the same quarter last year. ROE was 23.0% for the current quarter.
“During 2019, we set new records in investment product sales and client asset values. The solid financial results in both our Term Life and ISP segments drove record revenues and net income and we are beginning to see momentum in distribution,” said Glenn Williams, Chief Executive Officer. “As we begin 2020, we are well positioned to deliver strong value to our clients, our field and our stockholders.”
“During 2019, we set new records in investment product sales and client asset values. The solid financial results in both our Term Life and ISP segments drove record revenues and net income and we are beginning to see momentum in distribution,” said Glenn Williams, Chief Executive Officer. “As we begin 2020, we are well positioned to deliver strong value to our clients, our field and our stockholders.”
Capital
During the fourth quarter of 2019, the Company repurchased 347,832 shares of common stock for $44 million, bringing the year-to-date total to $225 million.
The Board of Directors authorized the repurchase of up to $300 million of its common stock through June 30, 2021 and approved an 18% increase in stockholder dividends to $0.40 per share, payable on March 16, 2020, to stockholders of record on February 24, 2020. The Company expects to repurchase $250 million of its common stock during 2020.
Primerica has a strong balance sheet and continues to be well-capitalized to meet future needs. Primerica Life Insurance Company’s statutory risk-based capital (RBC) ratio was estimated to be about 440% as of December 31, 2019.
During the fourth quarter of 2019, the Company repurchased 347,832 shares of common stock for $44 million, bringing the year-to-date total to $225 million.
The Board of Directors authorized the repurchase of up to $300 million of its common stock through June 30, 2021 and approved an 18% increase in stockholder dividends to $0.40 per share, payable on March 16, 2020, to stockholders of record on February 24, 2020. The Company expects to repurchase $250 million of its common stock during 2020.
Primerica has a strong balance sheet and continues to be well-capitalized to meet future needs. Primerica Life Insurance Company’s statutory risk-based capital (RBC) ratio was estimated to be about 440% as of December 31, 2019.
Primerica (NYSE: PRI) stock price history
The image below obtained from Google, shows the stock price history of Primerica over the last 5 years. And its been a very good time for Primerica stockholders. 5 years ago the stock of Primerica was trading at around $55 a stock and its currently trading at $130.28 a stock. That's a significant return of 136.9% provided to Primerica stockholders over the last 5 years.
The stock of Primerica is trading at closer to its 52 week high of $138.05 than it is to its 52 week low of $108.75 a stock, which to us is a clear indication that the short term sentiment and momentum of Primerica stock is positive at this point in time,
The stock of Primerica is trading at closer to its 52 week high of $138.05 than it is to its 52 week low of $108.75 a stock, which to us is a clear indication that the short term sentiment and momentum of Primerica stock is positive at this point in time,
Recent coverage of Primerica
The extract below discusses the latest regarding Primerica as obtained from TheStreet.com
Primerica (PRI) is expected to deliver a year-over-year increase in earnings on higher revenues when it reports results for the quarter ended December 2019. This widely-known consensus outlook gives a good sense of the company's earnings picture, but how the actual results compare to these estimates is a powerful factor that could impact its near-term stock price. The stock might move higher if these key numbers top expectations in the upcoming earnings report, which is expected to be released on February 11. On the other hand, if they miss, the stock may move lower.
While management's discussion of business conditions on the earnings call will mostly determine the sustainability of the immediate price change and future earnings expectations, it's worth having a handicapping insight into the odds of a positive EPS surprise.
Zacks Consensus Estimate
This life insurance and financial products company is expected to post quarterly earnings of $2.12 per share in its upcoming report, which represents a year-over-year change of +5.5%. Revenues are expected to be $526.19 million, up 8% from the year-ago quarter.
Estimate Revisions Trend
The consensus EPS estimate for the quarter has remained unchanged over the last 30 days. This is essentially a reflection of how the covering analysts have collectively reassessed their initial estimates over this period. Investors should keep in mind that an aggregate change may not always reflect the direction of estimate revisions by each of the covering analysts.
Read the full article here
Primerica (PRI) is expected to deliver a year-over-year increase in earnings on higher revenues when it reports results for the quarter ended December 2019. This widely-known consensus outlook gives a good sense of the company's earnings picture, but how the actual results compare to these estimates is a powerful factor that could impact its near-term stock price. The stock might move higher if these key numbers top expectations in the upcoming earnings report, which is expected to be released on February 11. On the other hand, if they miss, the stock may move lower.
While management's discussion of business conditions on the earnings call will mostly determine the sustainability of the immediate price change and future earnings expectations, it's worth having a handicapping insight into the odds of a positive EPS surprise.
Zacks Consensus Estimate
This life insurance and financial products company is expected to post quarterly earnings of $2.12 per share in its upcoming report, which represents a year-over-year change of +5.5%. Revenues are expected to be $526.19 million, up 8% from the year-ago quarter.
Estimate Revisions Trend
The consensus EPS estimate for the quarter has remained unchanged over the last 30 days. This is essentially a reflection of how the covering analysts have collectively reassessed their initial estimates over this period. Investors should keep in mind that an aggregate change may not always reflect the direction of estimate revisions by each of the covering analysts.
Read the full article here
Primerica (NYSE: PRI) stock valuation
So what do we value Primerica stock at after the release of their 4th quarter 2019 earnings report? Based on Primerica's 4th quarter 2019 earnings report our valuation models provides a target price (full value price) for Primerica at $137.90 a stock. We therefore believe that the stock of Primerica is slightly undervalued.
We usually suggest that long term and fundamental investors get in at least 10% below our target (full value) price which in this case is $137.90 therefore we believe a good entry point into Primerica stock is at $124.10 or below. We expect the stock of Primerica to trade in a narrow range our target price full value price) in coming weeks and months.
We usually suggest that long term and fundamental investors get in at least 10% below our target (full value) price which in this case is $137.90 therefore we believe a good entry point into Primerica stock is at $124.10 or below. We expect the stock of Primerica to trade in a narrow range our target price full value price) in coming weeks and months.
Next earnings release of Primerica
It is expected that Primerica will publish their 1st quarter 2019 earnings report in early May 2020