Rating Change #5
Primerica Inc (PRI) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures, attractive valuation levels, good cash flow from operations and increase in stock price during the past year. We feel these strengths outweigh the fact that the company shows low profit margins.
Highlights from the ratings report include:
- PRI's debt-to-equity ratio is very low at 0.21 and is currently below that of the industry average, implying that there has been very successful management of debt levels.
- Net operating cash flow has significantly increased by 90.20% to $80.47 million when compared to the same quarter last year. In addition, PRIMERICA INC has also vastly surpassed the industry average cash flow growth rate of 10.56%.
- After a year of stock price fluctuations, the net result is that PRI's price has not changed very much. Although its weak earnings growth may have played a role in this flat result, don't lose sight of the fact that the performance of the overall market, as measured by the S&P 500 Index, was essentially similar. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
- PRIMERICA INC's earnings per share declined by 17.4% in the most recent quarter compared to the same quarter a year ago. The company has suffered a declining pattern of earnings per share over the past year. However, we anticipate this trend reversing over the coming year. During the past fiscal year, PRIMERICA INC reported lower earnings of $2.36 versus $3.39 in the prior year. This year, the market expects an improvement in earnings ($2.60 versus $2.36).
Primerica, Inc., together with its subsidiaries, engages in the distribution of financial products on behalf of third parties to middle income households in the United States and Canada. The company has a P/E ratio of 10.7, above the average insurance industry P/E ratio of 10 and below the S&P 500 P/E ratio of 17.7. Primerica has a market cap of $1.84 billion and is part of the financial sector and insurance industry. Shares are up 10.6% year to date as of the close of trading on Tuesday.You can view the full Primerica Ratings Report or get investment ideas from our investment research center.
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