Should You Retain Globe Life (GL) Stock in Your Portfolio?

Globe Life Inc. GL has been gaining momentum from higher life and health sales, improved invested assets, increased productivity and agent count, strong liquidity position and effective capital deployment.

Earnings Estimate

The Zacks Consensus Estimate for Globe Life’s 2024 earnings per share indicates a year-over-year increase of 10%. The consensus estimate for revenues is pegged at $5.83 billion, implying a year-over-year improvement of 5.7%.

The consensus estimate for 2025 earnings per share and revenues indicates a year-over-year increase of 9.5% and 4.6%, respectively, from the corresponding 2024 estimates.

Earnings have improved 12.4% in the past five years, better than the industry average of 4.6%.

Northbound Estimate Revision

The Zacks Consensus Estimate for GL’s 2024 and 2025 earnings has moved 1% and 2.4% north, respectively, in the past 30 days. This should instill investors' confidence in the stock.

Earnings Surprise History

Globe Life has a decent surprise history, beating estimates in three of the last four quarters while missing in one, the average earnings surprise being 1.33%.

Zacks Rank & Price Performance

GL currently carries a Zacks Rank #3 (Hold). In the past year, the stock has lost 19.2% against the industry’s growth of 26.6%.

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Return on Equity

Globe Life’s return on equity, a measure reflecting how efficiently a company utilizes shareholders’ money, was 23% in the trailing 12 months, which expanded 280 basis points year over year and compares favorably with the industry’s average of 20.1%.

Style Score

Globe Life has a VGM Score of A. The VGM Score helps identify stocks with the most attractive value, the best growth and the most promising momentum.

Business Tailwinds

Globe Life has been witnessing a positive trend in revenues, driven by premium growth in its Life Insurance and Health Insurance segments and net investment income.

The strong performance of the American Income and Liberty National divisions should drive the top line in the future. Liberty National is likely to continue to benefit from improved productivity and agent count. GL’s expansion initiatives to capture heavily populated and less penetrated areas should drive growth in the future. Net life sales, as well as net health sales, are expected to grow in the mid-teens for Liberty National.

Moreover, net investment income continues to be another important driver of the company’s top-line growth and has been exhibiting improvement over the last few years. The metric is likely to keep growing, riding on improved invested assets and higher interest rates on new investments.

The company has maintained a strong liquidity position with sufficient cash-generation capabilities. Its operations consist primarily of writing basic protection life and supplemental health insurance policies, which generate strong and stable cash flows. Globe Life targets a consolidated company action level RBC ratio in the range of 300% to 320%. The company anticipates the RBC ratio for 2023 to be slightly above the middle of the targeted range without any additional capital contributions being made.

A strong capital position enables Globe Life to enhance its shareholder value via share buybacks and dividend payouts. The insurer has continuously been increasing its dividend over the past eight years (2016-2023) at a CAGR of 6.79%.

GL has an impressive Growth Score of B. This style score helps analyze the growth prospects of a company.

Headwinds

The insurance operations of GL remain exposed to the risk of catastrophic mortality stemming from pandemics, hurricanes, earthquakes, or man-made catastrophes, which may produce significant claims in larger areas. The life and health insurance products are particularly exposed to risks of catastrophic mortality. In addition, the occurrence of such an event in a concentrated geographic area could have a severe disruptive effect on business operations.

Stocks to Consider

Some better-ranked stocks from the Financial-Miscellaneous Services space are StepStone Group Inc. STEP, WisdomTree, Inc. WT and Euronet Worldwide, Inc. EEFT. While StepStone sports a Zacks Rank #1 (Strong Buy), WisdomTree and Euronet Worldwide carry a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

StepStone’s earnings surpassed estimates in two of the last four quarters and missed in the other two, the average surprise being 7.64%. In the past year, shares of STEP have rallied 68.6%.

The Zacks Consensus Estimate for STEP’s 2024 and 2025 earnings has moved up nearly 7.6% and 3.4%, respectively, in the past 30 days.

WisdomTree’s earnings surpassed estimates in one of the last four quarters and matched in the other three, the average surprise being 2.27%. In the past year, shares of WT have soared 39.7%.

The Zacks Consensus Estimate for WT’s 2024 and 2025 earnings has moved up nearly 7.6% and 3.4%, respectively, in the past 30 days.

Euronet Worldwide has a solid track record of beating earnings estimates in each of the trailing four quarters, the average being 9.29%. In the past year, shares of EEFT have lost 1.4%.

The Zacks Consensus Estimate for EEFT’s 2024 and 2025 revenues implies year-over-year growth of 15.8% and 12.2%, respectively.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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