Primerica (PRI) Gains on New Share Repurchase Program
As part of its effort to enhance shareholders’ value, Primerica, Inc.’s (PRI) board of directors approved $150 million share repurchase program for 2015.
Shares of Primerica gained 1.59% and closed at $51.65 in the last trading session following the announcement, reflecting positive investor sentiment.
The company has been engaging in share buybacks over last few quarters. The company had bought back about 1.4 million shares worth $65.5 million for the first nine months of 2014 under its previous $150 million authorization. As of Sep 30, 2014, it was left with $84.4 million under the share repurchase program.
Notably, Primerica’s solid liquidity position has aided its share buybacks. The company had cash and cash equivalents of $165 million (up 10.6% from 2013-end level) and retained earnings of $756.7 million (up 18.1% from 2013-end) as of Sep 30, 2014.
Apart from share repurchases, Primerica hikes its dividend from time to time to share more profit with shareholders. The last dividend increase was made earlier this year to 12 cents from 11 cents. The payout has risen at a 4-year CAGR of 4.7%. The company currently has a dividend yield of 0.94%.
The company’s continuous efforts to reduce share count are expected to bolster earnings per share (EPS) in the upcoming period. This initiative not only retains investors’ confidence in the stock but attracts new investors as well.
Additionally, one of the main reasons for the company’s income sources is its ability to generate and deploy capital to increase value for shareholders. Primerica has returned over 100% of operating earnings to stockholders since its 2010 initial public offering (IPO). The company’s consistent initiatives in this respect reflect its long-term outlook and the commitment to give strong returns on equity.
On the earnings front, Primerica’s operating income improved year over year in third-quarter 2014. The rise came on the back of strong growth in recurring life insurance revenues and solid Investment and Savings Products sales.
Currently, Primerica holds a Zacks Rank #4 (Sell). With positives like earnings improvement and share repurchase programs, we expect analysts to make upward revisions in their estimates, thereby putting upward directional pressure on the Zacks Rank.
Stocks to Consider
Better-ranked stocks in the life insurance industry that are worth reckoning include American Equity Investment Life Holding Co. (AEL), Fidelity & Guaranty Life Common (FGL) and China Life Insurance Co. Ltd. (LFC). While Equity Investment Life Holding and Fidelity & Guaranty Life Common sport a Zacks Rank #1 (Strong Buy), China Life Insurance Co. holds a Zacks Rank #2 (Buy).
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Read the Full Research Report on LFC
Read the Full Research Report on AEL
Read the Full Research Report on FGL
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