NEW YORK (TheStreet) -- Shares of Protective Life Corp. (PL) are up 18% to $69.29 in pre-market trade after Japan's Dai-ichi Life Insurance Co. (DCNSF) agreed to buy the Alabama-based company for $5.7 billion, the largest acquisition by a Japanese insurer, displaying its determination to grow overseas to counter weak prospects at home, the Wall Street Journal reports.
Dai-ichi Life, Japan's second-largest private-sector life insurer, said it will issue up to 250 billion yen ($2.4 billion) in new shares to help finance the widely expected purchase of Protective Life.
The Japanese insurer will retain existing management, which booked premiums and policy fees of $2.98 billion and net income of $393 million in 2013, the Journal said.
TheStreet Ratings team rates PROTECTIVE LIFE CORP as a Buy with a ratings score of A+. TheStreet Ratings Team has this to say about their recommendation:
"We rate PROTECTIVE LIFE CORP (PL) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its revenue growth, solid stock price performance, attractive valuation levels, notable return on equity and growth in earnings per share. We feel these strengths outweigh the fact that the company shows weak operating cash flow."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- PL's revenue growth has slightly outpaced the industry average of 7.9%. Since the same quarter one year prior, revenues rose by 17.4%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- Investors have apparently begun to recognize positive factors similar to those we have mentioned in this report, including earnings growth. This has helped drive up the company's shares by a sharp 34.60% over the past year, a rise that has exceeded that of the S&P 500 Index. Regarding the stock's future course, although almost any stock can fall in a broad market decline, PL should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Insurance industry and the overall market on the basis of return on equity, PROTECTIVE LIFE CORP has outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.
- PROTECTIVE LIFE CORP has improved earnings per share by 6.2% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past year. However, we anticipate underperformance relative to this pattern in the coming year. During the past fiscal year, PROTECTIVE LIFE CORP increased its bottom line by earning $4.86 versus $3.64 in the prior year. For the next year, the market is expecting a contraction of 0.2% in earnings ($4.85 versus $4.86).
- You can view the full analysis from the report here: PL Ratings Report