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Will Torchmark Corp. (TMK) Q3 Earnings Disappoint?

Torchmark CorporationTMK is set to report third-quarter 2015 earnings results on Oct 26, 2015. Last quarter, it posted negative earnings surprise of 1.87%. Let's see how things are shaping up for this announcement.

Factors Affecting the Past Quarter

Torchmark's niche market focus is beneficial to its earnings. Its most important distribution channel - American Income Exclusive Agency - is expected to continue witnessing a surge in life premiums. Additionally, low competition faced by the Global Life sub segment has been facilitating the sale of basic life insurance products to middle and lower middle-income households. Moreover, health insurance sales are expected to increase, thanks to accretion from the Family Heritage Life Insurance Company.

However, increased expenses as well as challenges faced by another distribution system - Liberty National - raise caution. Also, the company is facing pressure on excess investment income on account of the Part D plans. This is likely to dampen the top line and is thus, a threat to earnings.

Earnings Whispers

Our proven model does not conclusively show that Torchmark is likely to beat earnings this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank of #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here as you will see below.

Zacks ESP: Torchmark has an ESP of -1.89%. This is because the Most Accurate estimate stands at $1.04 and the Zacks Consensus Estimate is pegged at $1.06 per share.

Zacks Rank: Torchmark has a Zacks Rank #3, which increases the predictive power of ESP. However, a -1.89% ESP makes surprise prediction difficult.

We caution against Sell-rated stocks (Zacks Rank #4 and 5) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks to Consider

Here are three stocks from the finance sector which you may want to consider as our model shows that they have the right combination of elements to post an earnings beat this quarter:

Arch Capital Group Ltd. ACGL has an Earnings ESP of +4.26% and a Zacks Rank #2. The company is scheduled to release third-quarter earnings on Oct 28.

AXIS Capital Holdings Ltd. AXS has an Earnings ESP of +1.18% and a Zacks Rank #2. The company is expected to release third-quarter earnings on Oct 27.

Assurant Inc. AIZ has an Earnings ESP of +3.27% and a Zacks Rank #3. The company will release third-quarter earnings on Oct 27.

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Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

TORCHMARK CORP (TMK): Free Stock Analysis Report

ASSURANT INC (AIZ): Free Stock Analysis Report

AXIS CAP HLDGS (AXS): Free Stock Analysis Report

ARCH CAP GP LTD (ACGL): Free Stock Analysis Report

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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.


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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