Head to Head Analysis: Torchmark Corporation (TMK) versus Primerica (PRI)

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

Earnings & Valuation

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

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Torchmark Corporation $4.02 billion 2.36 $864.53 million $4.66 17.50
Primerica $1.62 billion 2.43 $411.75 million $4.90 17.90

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

Dividends

Torchmark Corporation pays an annual dividend of $0.60 per share and has a dividend yield of 0.7%. Primerica pays an annual dividend of $0.80 per share and has a dividend yield of 0.9%. Torchmark Corporation pays out 12.9% of its earnings in the form of a dividend. Primerica pays out 16.3% 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. Torchmark Corporation has increased its dividend for 7 consecutive years and Primerica has increased its dividend for 6 consecutive years.

Profitability

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

Net Margins Return on Equity Return on Assets
Torchmark Corporation 13.96% 11.55% 2.55%
Primerica 14.41% 18.48% 1.97%

Analyst Ratings

This is a breakdown of recent ratings and price targets for Torchmark Corporation and Primerica, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Torchmark Corporation 3 2 0 0 1.40
Primerica 0 4 1 0 2.20

Torchmark Corporation currently has a consensus price target of $71.00, indicating a potential downside of 12.92%. Primerica has a consensus price target of $84.67, indicating a potential downside of 3.46%. Given Primerica’s stronger consensus rating and higher possible upside, analysts clearly believe Primerica is more favorable than Torchmark Corporation.

Institutional & Insider Ownership

71.9% of Torchmark Corporation shares are held by institutional investors. Comparatively, 94.8% of Primerica shares are held by institutional investors. 3.8% of Torchmark Corporation shares are held by company insiders. Comparatively, 0.9% of Primerica shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.

Volatility and Risk

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

Summary

Primerica beats Torchmark Corporation on 11 of the 17 factors compared between the two stocks.

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).

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.

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