Primerica (NYSE: PRI) and Torchmark Corporation (NYSE:TMK) are both mid-cap finance companies, but which is the superior business? We will contrast the two companies based on the strength of their earnings, risk, analyst recommendations, dividends, institutional ownership, valuation and profitability.

Volatility & Risk

Primerica has a beta of 1.17, indicating that its share price is 17% more volatile than the S&P 500. Comparatively, Torchmark Corporation has a beta of 1, indicating that its share price has a similar volatility profile to the S&P 500.

Profitability

This table compares Primerica and Torchmark Corporation’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Primerica 14.41% 18.48% 1.97%
Torchmark Corporation 13.80% 11.83% 2.57%

Earnings & Valuation

This table compares Primerica and Torchmark Corporation’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Primerica $1.62 billion 2.42 $411.75 million $4.90 17.85
Torchmark Corporation $4.02 billion 2.45 $864.53 million $4.70 17.98

Torchmark Corporation has higher revenue and earnings than Primerica. Primerica is trading at a lower price-to-earnings ratio than Torchmark Corporation, indicating that it is currently the more affordable of the two stocks.

Analyst Ratings

This is a breakdown of recent recommendations for Primerica and Torchmark Corporation, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Primerica 0 5 0 0 2.00
Torchmark Corporation 3 4 0 0 1.57

Primerica currently has a consensus target price of $86.00, indicating a potential downside of 1.66%. Torchmark Corporation has a consensus target price of $75.33, indicating a potential downside of 10.87%. Given Primerica’s stronger consensus rating and higher possible upside, equities analysts plainly believe Primerica is more favorable than Torchmark Corporation.

Institutional and Insider Ownership

94.7% of Primerica shares are held by institutional investors. Comparatively, 72.2% of Torchmark Corporation shares are held by institutional investors. 0.9% of Primerica shares are held by insiders. Comparatively, 3.8% of Torchmark Corporation shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Dividends

Primerica pays an annual dividend of $0.80 per share and has a dividend yield of 0.9%. Torchmark Corporation pays an annual dividend of $0.60 per share and has a dividend yield of 0.7%. Primerica pays out 16.3% of its earnings in the form of a dividend. Torchmark Corporation pays out 12.8% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Primerica has increased its dividend for 6 consecutive years and Torchmark Corporation has increased its dividend for 7 consecutive years.

Summary

Primerica beats Torchmark Corporation on 9 of the 16 factors compared between the two stocks.

About Primerica

Primerica Inc. (Primerica) is a distributor of financial products to middle-income households in the United States and Canada. The Company operates through three segments: Term Life Insurance, Investment and Savings Products, and Corporate and Other Distributed Products. The Term Life Insurance segment includes underwriting profits on its in-force book of term life insurance policies, net of reinsurance, which are underwritten by its life insurance company subsidiaries. The Investment and Savings Products segment includes retail and managed mutual funds, and annuities distributed through licensed broker-dealer subsidiaries and includes segregated funds, an individual annuity savings product that it underwrites in Canada through Primerica Life Insurance Company of Canada (Primerica Life Canada). In the United States, it distributes mutual fund and annuity products of various third-party companies. It also earns fees for account servicing on a subset of the mutual funds it distributes.

About Torchmark Corporation

Torchmark Corporation (Torchmark) is an insurance holding company. The Company, through its subsidiaries, provides a range of life and health insurance products and annuities to a base of customers. The Company’s segments include life insurance, health insurance, annuities and investment. The life insurance segment includes traditional and interest-sensitive whole life insurance as well as term life insurance. The Health insurance products are guaranteed-renewable and include Medicare Supplement, critical illness, accident and limited-benefit supplemental hospital and surgical coverage’s. Annuities include fixed-benefit contracts. The Company markets its insurance products through various distribution channels, each of which sells the products of its insurance segments. Its subsidiaries include American Income Life Insurance Company (American Income) and Liberty National Life Insurance Company (Liberty National).

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