Primerica (PRI) Surges 85% in a Year: Will the Rally Last?

Primerica, Inc. PRI shares have gained 84.8% in a year compared with the industry's increase of 10.8% and the Finance sector’s increase of 61.9%. The Zacks S&P 500 composite has risen 61.7% in the said time frame. With market capitalization of $5.8 billion, average volume of shares traded in the last three months was 0.2 million.

A compelling product portfolio, strong market presence and solid capital position continue to drive Primerica. The company has a decent surprise history of beating earnings estimates in three of the last four reported quarters.

Return on equity of 23.3% in the trailing twelve months was better than the industry average of 13.1%, reflecting the company’s efficiency in utilizing shareholders’ fund.  

Will the Bull Run Continue?

The Zacks Consensus Estimate for 2021 and 2022 earnings has moved up 1.4% and 4.7% in the past 60 days, reflecting analysts’ optimism, indicating year-over-year increase of 13.6% and 11.2%, respectively.

The company continues to witness strong demand for term life insurance products. Also, the pandemic has resulted in stronger demand for insurance protection. This in turn should drive growth opportunities for the life insurer. Riding on strong sales and persistency in 2020, Primerica estimates adjusted direct premiums to grow between 12% and 13% in 2021.

In fact, the company noted growth in business across recruiting, life sales and investment sales in January 2021.

This Zacks Rank #3 (Hold) second largest issuer of term life insurance coverage in North America boasts a strong capital position. The life insurer has raised dividend 10 times in the last nine years.  Its board also approved a $300 million of share repurchases through June 2022. It has a track record of total stockholder return consistently outperforming the S&P 500 Index.

Primerica exited 2020 with liquidity of $350 million and Primerica Life Insurance Company statutory risk-based capital ratio of about 400%.

The stock carries an impressive VGM Score of B. Here V stands for Value, G for Growth and M for Momentum, with the score being a weighted combination of all three factors.

Stocks to Consider

Some better-ranked stocks from the same space include Athene ATH, Sun Life Financial SLF and James River Group Holdings JRVR, each carrying Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Athene delivered an earnings surprise of 31.9% in the last reported quarter.

Sun Life Financial delivered an earnings surprise of 17.71% in the last reported quarter.

James River Group delivered an earnings surprise of 6.86% in the last reported quarter.

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