Latest news with #PrimericaInc
Forbes
30-04-2025
- Business
- Forbes
Finding Quality In A Volatile Market: Primerica (PRI)
Rising stock market chart on a trading board background. The incredibly long run of stability in capital markets has come to an end. No longer, as Ray Dalio points out, can investors make easy money betting on the stock market going up. Change can be scary, but it can also create opportunity, especially as the market gets more efficient. Now is the time when diligence matters most. And, there's no better proof that diligence makes money for investors than the performance of the Bloomberg New Constructs Very Attractive Stocks Index, which has strongly out-performed he S&P 500 all year. It beat the S&P 500 by over 9% in 1Q2025. Real alpha comes from going the extra mile and getting critical data that no one else has. My Most Attractive Stocks Model Portfolio is proof that such research creates real alpha. I scour the entire market to find the gems in this Model Portfolio. I leverage my firm's research to deliver you those companies with truly strong fundamentals and undervalued stock prices. Today, I'm sharing a stock pick from my Most Attractive Stocks Model Portfolio. This pick comes with a concise summary that gives you insight into the rigor of quality research and my approach to picking stocks. I'm proud to share my work, and I want to help investors when they need it most. Primerica Inc (PRI) has grown revenue and net operating profit after tax (NOPAT) by 9% and 18% compounded annually since 2014, respectively. Primerica's NOPAT margin increased from 14% in 2014 to 30% in 2024 while its invested capital turns rose from 0.9 to 1.0 over the same time. Rising NOPAT margins and invested capital turns drive Primerica's return on invested capital (ROIC) from 11% in 2014 to 30% in 2024. Figure 1: Primerica's Revenue and NOPAT Since 2014 PRI Revenue & NOPAT 2014-2024 At its current price of $249/share, PRI has a price-to-economic book value (PEBV) ratio of 0.7. This ratio means the market expects Primerica's NOPAT to permanently decline by 30% from 2024 levels. This expectation seems overly pessimistic for a company that has grown NOPAT by 18% compounded annually over the last decade and 20% compounded annually over the past five years. Even if Primerica's NOPAT margin falls to 20% (below 2024 NOPAT margin of 30% and equal to five-year average margin) and the company grows revenue by just 5% (below ten-year compound annual growth rate of 9%) compounded annually through 2034, the stock would be worth $309/share today – a 24% upside. In this scenario, Primerica's NOPAT would grow just 1% compounded annually through 2034. Should Primerica grow profits more in line with historical levels, the stock has even more upside. Below are specifics on the adjustments I made based on Robo-Analyst findings in Primerica's 10-K: Income Statement: I made under $600 million in adjustments, with a net effect of removing over $400 million in non-operating expense. Balance Sheet: I made just under $1 billion in adjustments to calculate invested capital with a net increase of under $200 million. One of the most notable adjustments was for other comprehensive income. Valuation: I made just under $100 million in adjustments, all of which decreased shareholder value. The most notable adjustment was for total debt.
Yahoo
13-02-2025
- Business
- Yahoo
Primerica Inc (PRI) Q4 2024 Earnings Call Highlights: Record Revenue and Strategic Growth Amid ...
Adjusted Net Operating Income (Q4): Increased 11% year-over-year. Diluted Adjusted Operating Income Per Share (Q4): Increased 17% year-over-year. Adjusted Net Operating Income (Full Year): Increased 14% year-over-year. Adjusted Operating Income Per Share (Full Year): Increased 20% year-over-year. Common Stock Repurchase: $425 million repurchased in 2024. Dividends Paid: $113 million in regular dividends in 2024. Revenue (Full Year): Reached $3 billion for the first time. Term Life Revenue (Q4): $451 million, up 4% year-over-year. Investment and Savings Product Sales (Q4): $3.3 billion, up 41% year-over-year. Client Asset Values (Year-End): $112 billion, up 16% year-over-year. Net Client Inflows (Q4): $731 million, up from $172 million in Q4 2023. US Mortgage Volume (2024): Nearly $400 million, up 35% year-over-year. Term Life Operating Margin (Q4): 21.3%, compared to 22.6% in the prior year period. Investment and Savings Products Revenue (Q4): $286 million, up 29% year-over-year. Investment and Savings Products Pretax Income (Q4): $82 million, up 31% year-over-year. Consolidated Insurance and Other Operating Expenses (Q4): $152 million, up 13% year-over-year. Cash and Invested Assets (Year-End): $497 million at the holding company. RBC Ratio (Year-End): Primerica Life's estimated RBC ratio was 430%. Warning! GuruFocus has detected 6 Warning Sign with PRI. Release Date: February 12, 2025 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Primerica Inc (NYSE:PRI) achieved record-breaking financial results in 2024, with a 14% increase in adjusted net operating income and a 20% increase in adjusted operating income per share. The company repurchased $425 million of its common stock and paid $113 million in dividends, returning 79% of adjusted net operating income to stockholders. Primerica Inc (NYSE:PRI) experienced a 41% year-over-year increase in sales for its Investment and Savings Products segment, driven by strong demand across all major product lines. The company closed nearly $400 million in US mortgage volume, a 35% increase compared to the prior year, indicating strong performance in the mortgage lending market. Primerica Inc (NYSE:PRI) ended 2024 with a record high of 151,611 life license representatives, reflecting a 7% increase compared to the previous year. The benefits and claims ratio increased to 58.6% in the fourth quarter of 2024, partly due to a $4.2 million remeasurement loss from a refinement in the actuarial model. The Term Life operating margin decreased to 21.3% from 22.6% in the prior year period, despite unchanged pretax income year-over-year. Higher lapses in insurance policies were observed, particularly in earlier durations, due to cost of living pressures on middle-income families. The fourth quarter insurance expense ratio increased to 8% from 7.1% in the prior year, driven by increased variable expenses and higher technology investments. Primerica Inc (NYSE:PRI) anticipates a conservative outlook for 2025, with expected growth in issued life policies around only 2%, due to ongoing cost of living challenges. Q: Could you talk about whether 5% ADP growth is a good run rate, or if there's still a boost from the IPO reinsurance transaction? A: Tracy Tan, CFO: The 5% ADP growth guidance considers the runoff of insurance and the impact of our large in-force block and new sales. We've also factored in higher lapses, so the 5% growth accounts for the faster pace of coinsurance runoff. Q: What's driving strong ISP sales despite cost of living pressures on the life side, and how do you see lapses trending into 2025? A: Glenn Williams, CEO: Our businesses have different dynamics. While cost of living pressures affect life insurance, larger ISP transactions like retirement plan rollovers aren't impacted. Tracy Tan, CFO: Lapses are elevated but stabilizing. Persistency is improving, and we expect a return to normal levels over time. Q: What's the expected duration for cost of living pressures to correct, and can operational leverage be improved through automation? A: Glenn Williams, CEO: Improvement in cost of living is needed for a sustained period before easing buying habits. Operational leverage can be improved through technology, making processes easier and more efficient for clients and representatives. Q: Is the good VA activity driven by demographic tailwinds, and are there any changes in mortality trends? A: Glenn Williams, CEO: VA activity is driven by demographics and job changes. Tracy Tan, CFO: Mortality trends have been stable and favorable, with improvements particularly in the US. Q: With higher share repurchase authorization and dividend increase, is this capital return sustainable, and what about statutory earnings? A: Tracy Tan, CFO: Our business model supports consistent cash generation and capital return. The 79% return in 2024 is sustainable, and there's nothing unusual in statutory earnings. We aim for a healthy capital position with an RBC ratio around 400%. For the complete transcript of the earnings call, please refer to the full earnings call transcript. This article first appeared on GuruFocus.
