GL Stock Plunges 16.7% Year to Date: Should You Hold or Fold?

Zacks

Globe Life Inc. GL shares have lost 16.7% in the year-to-date period against the industry’s 3.8% growth. It has also underperformed the Finance sector’s 12% return and the Zacks S&P 500 composite’s 15% growth in the said time frame.

Year-to-Date Price Performance

GL has been grappling with higher expenses over the past few years. Higher total policyholder benefits, amortization of deferred acquisition costs, commissions, premium taxes and non-deferred acquisition costs, other operating expenses and interest expenses resulted in escalating expenses.

Globe Life has been incurring high administrative expenses over the years. For 2024, GL expects administrative expenses to be approximately 7% of premiums, higher than the 2023 level.

Closing at $101.34 in the last trading session, the stock stands 23% below its 52-week high of $132.

Globe Life’s long-term debt has been increasing over the last few years with debt-to-capital ratio deteriorating. As of June 30, 2024, total debt increased 11% year over year. A high debt level has been inducing higher interest expenses, which also increased in the second quarter of 2024. The company must service its debt uninterruptedly, or else creditworthiness could be dented.

GL Trading Above 50-Day Moving Average

GL closed at $101.34 on Wednesday, above the 50-day simple moving average (SMA) of $93.43, representing an uptrend. SMA is a widely used technical analysis tool to predict future price trends by analyzing historical price data.

GL’s Growth Projection

The Zacks Consensus Estimate for Globe Life’s 2024 earnings per share indicates a year-over-year increase of 12%. The consensus estimate for revenues is pegged at $5.82 billion, implying a year-over-year improvement of 5.5%.

The consensus estimate for 2025 earnings per share and revenues indicates an increase of 10.6% and 4.7%, respectively, from the corresponding 2024 estimates.

Earnings of GL grew 12.4% in the last five years, better than the industry average of 5.5%.

Positive Analyst Sentiment Instills Confidence in GL

One of the six analysts covering the stock has raised estimates for 2024 while two analysts have raised estimates for 2025 over the past 30 days. The consensus estimate for 2024 and 2025 earnings indicates an improvement of 0.08% and 0.8%, respectively.

GL’s Return on Capital

GL’s trailing 12-month return on equity is 21.9%, ahead of the industry average of 20.9%. Return on equity, a profitability measure, reflects how effectively a company is utilizing its shareholders.

Also, the return on invested capital (ROIC) in the trailing 12 months was 13.3%, better than the industry average of 4.6%. Its ROIC has been increasing over the last few quarters amid capital investment made over the same time frame. This reflects the company’s efficiency in utilizing funds to generate income.

Key Drivers of Globe Life

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 comprise writing basic protection life and supplemental health insurance policies, which generate strong and stable cash flows. For 2024, Globe Life has targeted a consolidated Company Action Level RBC ratio of 300-320%.

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 Shares Are Affordable

Globe Life is trading at a discount compared with the industry average. It presents a compelling investment opportunity with its attractive forward 12-month price-to-book ratio of 7.91X, lower than the industry average of 13.54X. Also, it has a Value Score of A.

Shares of other players from the same space, such as Guild Holdings Company GHLD, Marex Group PLC MRX and PRA Group, Inc. PRAA, are also trading at a discount to the industry average.

Conclusion

While Globe Life witnesses higher expenses, its higher life and health sales, improved invested assets, increased productivity and agent count, strong liquidity position and effective capital deployment could pave the way for recovery and sustained growth. GL should benefit from Higher return on capital, favorable growth estimates and the affordability of the stock. It is, therefore, wise to hold on to this Zacks Rank #3 (Hold) stock. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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Pra Group Names Adrian Murphy As Its Global Chief Data And Analytics Officer

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PRA Group

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Marex Group Plc To Participate In Upcoming Barclays Global Financial Services Conference

Reuters

Marex Group

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NEW YORK, Sept. 06, 2024 (GLOBE NEWSWIRE) -- Marex Group plc (‘Marex’ or the ‘Group’), the diversified global financial services platform, today announces that Ian Lowitt, Group Chief Executive Officer, will be participating in a fireside chat at the Barclays Global Financial Services Conference. The fireside chat will take place on Tuesday, September 10th at 7:30 a.m. ET. It will be available via webcast and can be accessed here.

Webcast Link: https://cc.webcasts.com/barc002/090924a_js/?entity=67_OXJ12IT

About Marex Group:

Marex Group plc (NASDAQ: MRX) is a diversified global financial services platform providing essential liquidity, market access and infrastructure services to clients across energy, commodities and financial markets. The Group provides comprehensive breadth and depth of coverage across four core services: Clearing, Agency and Execution, Market Making and Hedging and Investment Solutions. It has a leading franchise in many major metals, energy and agricultural products, executing around 129 million trades and clearing 856 million contracts in 2023. The Group provides access to the world’s major commodity markets, covering a broad range of clients that include some of the largest commodity producers, consumers and traders, banks, hedge funds and asset managers. Headquartered in London with more than 35 offices worldwide, the Group has over 2,000 employees across Europe, Asia and the Americas. For more information visit www.marex.com.

https://www.globenewswire.com/newsroom/ti?nf=MTAwMDk5MDQwNCM0MDE5NDAzNTgjMjI2Mzc5NA==

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Enquiries please contact:

Marex

Nicola Ratchford / Robert Coates

+44 (0) 7786548889 / +44 7880 486329 | nratchford@marex.com / rcoates@marex.com

FTI Consulting US / UK

+1 (919) 609-9423 / +44 (0) 7776 111 222 | marex@fticonsulting.com

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Top Research Reports for Eli Lilly, Chevron & Abbott

Zacks

Monday, August 26, 2024

The Zacks Research Daily presents the best research output of our analyst team. Today's Research Daily features new research reports on 16 major stocks, including Eli Lilly and Company , Chevron Corporation and Abbott Laboratories , as well as a micro-cap stocks Bridger Aerospace Group Holdings, Inc. . The Zacks microcap research is unique as our research content on these small and under-the-radar companies is the only research of its type in the country.

These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.

You can see all of today’s research reports here >>>

Eli Lilly shares were hit hard during the recent market turmoil, but they have recouped all of their losses by now. On a year-to-date basis, Eli Lilly shares are up +63.9% vs. +29.3% for the large-cap pharma industry. Driving Eli Lilly's momentum is the company’s weight loss drug and a track record of strong quarterly results.

Eli Lilly has seen unparalleled success with its GLP-1 drugs, Mounjaro and Zepbound. Despite a short time on the market, they have become key top-line drivers, with demand rising rapidly. In the past couple of years, it has received approvals for several new drugs like Kisunla, Omvoh and Jaypirca and witnessed pipeline and regulatory success. Its new drugs have been contributing significantly to its top-line growth in 2024. Lilly is also making rapid pipeline progress in areas like obesity, diabetes and Alzheimer’s.

However, declining sales of Trulicity, rising pricing pressure on some drugs and potential competition in the GLP-1 diabetes/obesity market are some top-line headwinds.

(You can read the full research report on Eli Lilly here >>>)

Shares of Chevron have gained +0.2% over the past six months against the Zacks Oil and Gas - Integrated - International industry’s gain of +7.2%. The company is grappling with high sensitivity to oil price fluctuations and relatively expensive valuation. Another concern is the sub-100% reserve replacement ratio, indicating challenges in replenishing produced energy. Considering all these factors, investors are advised to wait for a better entry point.

Nevertheless, Chevron is positioned as one of the top global integrated oil firms, set for sustainable production growth, particularly due to its dominant position in the lucrative Permian Basin. Further, the planned acquisition of Hess Corporation is expected to significantly strengthen Chevron's presence in oil-rich Guyana.

(You can read the full research report on Chevron here >>>)

Abbott shares have gained +11.6% over the past year against the Zacks Medical - Products industry’s gain of +15.6%. The company’s pipeline is generating several new growth prospects, which will help sustain the positive momentum and contribute to the strong growth projection in 2024.

Alinity, the company’s next-generation suite of systems, is a key driver in the core lab diagnostics business. EPD's impressive performance stems from the company’s unique business model. The company is optimistic about its latest progress with biosimilars and expects this to significantly boost EPD sales, beginning 2025.

Freestyle Libre CGM device is also on a great trajectory. Within Nutrition, after a period of hiccups, Abbott has finally reestablished itself as the market leader in the infant formula business. Yet, the significant runoff of COVID-19 testing-related sales is hurting Abbott’s Diagnostics growth. Tough macro conditions also pose a concern.

(You can read the full research report on Abbott here >>>)

Shares of Bridger Aerospace have underperformed the Zacks Aerospace - Defense industry over the past year (-54.9% vs. +0.3%). This microcap company with market capitalization of $165.88 million is witnessing high leverage and debt servicing pressures, seasonal revenue dependence, ongoing losses and execution risks in international expansion pose significant challenges.

Its success hinges on maximizing fleet utilization, managing debt and maintaining government contracts amid an unpredictable wildfire environment. Nevertheless, Bridger Aerospace is positioned to capitalize on the rising demand for aerial firefighting services, driven by climate change and population shifts to wildfire-prone areas.

Bridger Aerospace's fleet, including CL-415EAF "Super Scoopers" and advanced surveillance aircraft, secures its strong market position and ensures a stable income. The acquisition of FMS Aerospace diversifies revenue streams, adding year-round income and reducing reliance on seasonal fire activity. The expansion into international markets offers growth potential.

(You can read the full research report on Bridger Aerospace here >>>)

Other noteworthy reports we are featuring today include Phillips 66 , Occidental Petroleum Corporation and BCE Inc. .

Director of Research

Sheraz Mian

Note: Sheraz Mian heads the Zacks Equity Research department and is a well-regarded expert of aggregate earnings. He is frequently quoted in the print and electronic media and publishes the weekly Earnings Trends and Earnings Preview reports. If you want an email notification each time Sheraz publishes a new article, please click here>>>

Today's Must Read

Lilly's Mounjaro, Zepbound Key to 2024 Sales Growth

Chevron to Gain Guyana Foothold with Hess Buy

Core Lab Diagnostics, Solid EPD Prospect Aids Abbott

Featured Reports

Planned Investments, Permian Basin Focus Aid Occidental

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Strength in Bell Media Aids BCE, High Interest Costs Ails

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Focus on Cost Savings to Bolster McCormick's Margins

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MAP 2025 Plan Aids RPM International , High Costs Hurt

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Solid Budget Aids Curtiss-Wright Amid Fuel Price Hike

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Strong SMB clientele Aids BILL Holdings' Prospects

Per the Zacks analyst, BILL is benefiting from an expanding small and medium business clientele, as well as a diversified business model.

New Upgrades

Phillips 66's Diversified Business Model Aids Growth

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Patient-Centric Care Model, Overseas Growth Aid DaVita

The Zacks analyst is upbeat about DaVita's patient-centric business model that leverages its kidney care services platform. Steady expansion in the international markets is an added plus.

Globe Life Continues to Gain From Solid American Income

Per the Zacks analyst, Globe Life is set to grow on solid American Income distribution channel, which remains the largest contributor of premium and underwriting margin, that aided revenue growth.

New Downgrades

American Airlines' Prospects Hurt by Elevated Costs

High fuel and labor expenses at American Airlines bother the Zacks analyst. Weakness pertaining to liquidity represents another headwind.

Lower Production in Europe & Rising Debt Ail Magna

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Avnet Hurt by Declining Demand, High Inventory Levels

Per the Zacks analyst, softened demand in a tight IT spending environment, along with high inventory levels at customers, is likely to hurt Avnet's financial performance in the near term.

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Globe Life (GL) Up 11.1% Since Last Earnings Report: Can It Continue?

Zacks

It has been about a month since the last earnings report for Globe Life . Shares have added about 11.1% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Globe Life due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.

Globe Life Q2 Earnings Beat on Solid Underwriting Income

Globe Life Inc.’s second-quarter 2024 net operating income of $2.97 per share beat the Zacks Consensus Estimate by 2.4%. The bottom line improved 14% year over year, primarily driven by higher excess investment income and insurance underwriting income.

The second-quarter results benefited on the back of higher Life and Health underwriting income, growth in insurance premiums and improved net investment income, partly offset by an elevated expense level.

Behind the Headlines

Globe Life reported total premium revenues of $1.2 billion, up 5% year over year. This upside was primarily driven by higher premiums from Life and Health insurance.

Net investment income increased 9% year over year to $285.6 million.

The company reported operating revenues of $1.4 billion, up 5.9% from the year-ago quarter. The improvement was driven by growth in Life and Health insurance premiums and higher net investment income. The top line matched the Zacks Consensus Estimate.

Excess investment income, a measure of profitability, increased 36% year over year to $42.7 million. Total insurance underwriting income increased 8% year over year to $340.4 million. The increase was due to higher Life and Health underwriting income.

Administrative expenses were up 9% year over year to $82.2 million. Total benefits and expenses surged 89% year over year to $1.11 billion, primarily due to higher total policyholder benefits, amortization of deferred acquisition costs, commissions, premium taxes and non-deferred acquisition costs, as well as other operating expenses and interest expenses.

Segmental Results

Premium revenues at Life increased 4% year over year to $815.4 million, driven by higher premiums written by distribution channels like American Income and Liberty National. American Income grew 7% and Liberty National gained 6%.

Net sales of $153.5 million increased 10% year over year. Underwriting margins increased 8% year over year to $320.3 million.

Health insurance premium revenues rose 7% year over year to $351.6 million, primarily driven by higher premiums from United American, Family Heritage, Liberty National, American Income and Direct to Consumer. Net health sales increased 17% year over year to $57.7 million. Underwriting margins increased 9% year over year to $100.4 million.

Financial Update

Shareholders’ equity, excluding accumulated other comprehensive income (AOCI), as of Jun 30, 2024, increased 7.1% year over year to $7.41 billion.

As of Jun 30, 2024, Globe Life reported book value per share, excluding AOCI, of $82.38, up 14.3% year over year.

Operating return on equity, excluding AOCI, was 14.5% in the reported quarter, which contracted 10 basis points year over year.

Share Repurchase

Globe Life repurchased 3.8 million shares worth $314 million in the reported quarter.

2024 View

GL projects net operating income in the range of $11.80-$12.10 per share for the year ending Dec 31, 2024.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in fresh estimates.

VGM Scores

At this time, Globe Life has a poor Growth Score of F, a grade with the same score on the momentum front. However, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Globe Life has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.

Performance of an Industry Player

Globe Life is part of the Zacks Financial - Miscellaneous Services industry. Over the past month, Virtu Financial , a stock from the same industry, has gained 7.4%. The company reported its results for the quarter ended June 2024 more than a month ago.

Virtu Financial reported revenues of $385.08 million in the last reported quarter, representing a year-over-year change of +38.2%. EPS of $0.83 for the same period compares with $0.37 a year ago.

For the current quarter, Virtu Financial is expected to post earnings of $0.64 per share, indicating a change of +42.2% from the year-ago quarter. The Zacks Consensus Estimate has changed +1.6% over the last 30 days.

Virtu Financial has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of B.

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