Head to Head Analysis: Torchmark (TMK) and Emergent Capital (EMGC)

Emergent Capital (OTCMKTS: EMGC) and Torchmark (NYSE:TMK) are both finance companies, but which is the superior investment? We will contrast the two businesses based on the strength of their earnings, institutional ownership, risk, analyst recommendations, profitability, valuation and dividends.

Analyst Recommendations

This is a summary of recent recommendations and price targets for Emergent Capital and Torchmark, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Emergent Capital 0 0 1 0 3.00
Torchmark 2 4 0 0 1.67

Torchmark has a consensus price target of $76.17, suggesting a potential downside of 17.89%. Given Torchmark’s higher possible upside, analysts plainly believe Torchmark is more favorable than Emergent Capital.

Dividends

Torchmark pays an annual dividend of $0.60 per share and has a dividend yield of 0.6%. Emergent Capital does not pay a dividend. Torchmark pays out 12.9% of its earnings in the form of a dividend. Torchmark has raised its dividend for 8 consecutive years.

Earnings and Valuation

This table compares Emergent Capital and Torchmark’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Emergent Capital $1.12 million 55.68 -$49.68 million ($0.98) -0.41
Torchmark $3.94 billion 2.72 $549.77 million $4.64 19.99

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

Volatility & Risk

Emergent Capital has a beta of 0.05, suggesting that its stock price is 95% less volatile than the S&P 500. Comparatively, Torchmark has a beta of 1.02, suggesting that its stock price is 2% more volatile than the S&P 500.

Profitability

This table compares Emergent Capital and Torchmark’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Emergent Capital -42.49% -12.80% -3.98%
Torchmark 13.80% 11.60% 2.54%

Institutional & Insider Ownership

72.5% of Torchmark shares are owned by institutional investors. 33.3% of Emergent Capital shares are owned by insiders. Comparatively, 3.8% of Torchmark shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

Summary

Torchmark beats Emergent Capital on 12 of the 17 factors compared between the two stocks.

About Emergent Capital

Emergent Capital, Inc., formerly Imperial Holdings, Inc., is a specialty finance company that invests in asset classes, primarily life settlements. The Company, through its subsidiary companies, owns a portfolio of approximately 630 life insurance policies (life settlements). The Company purchases individual policies and portfolios of life insurance policies and manages those assets based on actuarial and market data. The Company provides customized liquidity solutions to owners of illiquid financial assets in two markets, which include life finance and structured settlements. The Company focuses on lending to outright purchases of portfolios, to tertiary trades, as well as individual secondary market purchases. The Company invests in short and long-term life settlement investments.

About Torchmark

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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