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Reasons to Hold Primerica (PRI) Stock in One's Portfolio

Strong demand for protection products should drive sales growth and policy persistency for Primerica (PRI).

This story originally appeared on Zacks

Primerica, Inc. PRI is poised for growth, given a compelling portfolio, strong market presence, solid capital position and favorable growth estimates. These make Primerica stock worth retaining in one’s portfolio.

Primerica has a decent track record of beating earnings estimates. It beat the Zacks Consensus Estimate in two of the last four reported quarters while missing in two, delivering an average four-quarter earnings surprise of 3.26%.

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Zacks Rank & Price Performance

Primerica currently carries a Zacks Rank #3 (Hold). Year to date, the stock has rallied 15.1%, outperforming the industry’s increase of 13.5%.

Zacks Investment ResearchImage Source: Zacks Investment Research

Growth Projections

The Zacks Consensus Estimate for Primerica’s 2022 earnings is pegged at $13.43 per share, indicating a 12.8% increase from the year-ago reported figure on 8.5% higher revenues of $2.9 billion.

Return on Equity

Return on equity (ROE) is a profitability measure to identify how efficiently a company is utilizing its shareholders fund. Its trailing 12-month ROE of 22.6% is better than the industry average of 11.4%.

Business Tailwinds

Primerica is the second-largest issuer of term life insurance coverage in North America. Strong demand for protection products should drive sales growth and policy persistency. PRI’s strong business model makes it well poised to cater to the middle market's increased demand for financial security. This, in turn, should continue to boost operational performance.

With the U.S. mortgage distribution business gaining traction, Primerica remains focused on expanding distribution.

Primerica has been strengthening its balance sheet by improving its leverage ratio. PRI scores strongly with credit rating agencies.

Effective Capital Deployment

Primerica has raised dividends 10 times in the last nine years. The board approved a $275 million buyback authorization.

Primerica boasts a stockholder return of 200% over the last five years, outperforming the S&P 500 Insurance Index’s 56%.

Upbeat Guidance

Primerica expects 12% growth in adjusted direct premiums in the fourth quarter of 2021. While Investment and Savings Products sales are estimated to rise between 20% and 25% in the fourth quarter, the same is expected to increase 40% in 2021.

Sales in the Term Life segment are expected to increase more than 10% from the pre-pandemic levels in 2021. Margin is expected between 19% and 20% in the fourth quarter of 2021.

Stocks to Consider

Some better-ranked stocks from the insurance space include American Equity Investment Life Holding AEL, Athene Holding ATH and Brighthouse Financial BHF.

The Zacks Consensus Estimate for American Equity’s 2022 earnings indicates a 52.2% year-over-year increase. AEL delivered a four-quarter average earnings surprise of 31.49%. American Equity sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here

Athene, sporting a Zacks Rank #1, delivered a four-quarter average earnings surprise of 46.12%. It carries a favorable VGM Score of B. Athene expects healthy organic growth in 2021 and estimates total organic inflows to be about $35 billion.

Brighthouse Financial carries a Zacks Rank #2. The Zacks Consensus Estimate for 2022 has moved up 0.6% in the past 60 days. Brighthouse delivered a four-quarter average earnings surprise of 67.61%.

Shares of American Equity, Athene and Brighthouse Financial have gained 41.3%, 98.6% and 47.7%, respectively, year to date. 

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