Why is Globe Life (GL) up 10% since its last earnings report?

It’s been about a month since Globe Life’s (GL) last earnings report. The stock has risen about 10% in that time, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Globe Life headed for a decline? Before we dive into how investors and analysts have reacted as of late, let’s take a quick look at the company’s most recent earnings report in order to better understand the important catalysts.

Globe Life’s results for the first quarter do not meet estimates, revenues are growing y/y

Net operating profit of Globe Life Inc. first-quarter 2024 earnings of $2.78 per share missed the Zacks Consensus Estimate by 0.7%. The financial result improved by 10% year-on-year, mainly due to higher insurance income and excess investment income.

Behind the headlines

Globe Life reported total premium revenue of $1.1 billion, up 5% year-over-year. This improvement was mainly due to the increase in life and health insurance premiums. Net investment income increased 10% year-over-year to $282.5 million.

The company reported operating revenues of $1.4 billion, up 5.5% from the same quarter last year. The improvement was driven by an increase in life and health insurance premiums and higher net income from investments. Excess investment income, a measure of profitability, increased 50% year over year to $43.7 million.

Total underwriting revenue increased 4.2% year-over-year to $324 million. The increase resulted from higher revenues from property and health insurance.

Administrative expenses increased 8.8% year over year to $80.4 million.
Total benefits and costs increased 5.1% year-over-year to $1 billion, primarily due to higher total policyholder benefits, amortization of deferred acquisition costs, commissions, premium taxes and non-deferred acquisition costs, as well as other operating costs and interest expense .

Segment results

Life premium revenue increased 4% year-over-year to $804.2 million, driven by higher premiums written through distribution channels such as American Income and Liberty National. American Income and Liberty National gained 7% each year over the previous year.

Net sales of $149.4 million increased 7% year-over-year. Underwriting margins increased 6% year-over-year to $309 million.

Health insurance premium revenue increased 6% year-over-year to $341 million, primarily driven by higher premiums for United American, American Income, Direct to Consumer and Family Heritage. Net health sales increased 9% year-over-year to $54 million. Underwriting margins increased 3% year-over-year to $93.7 million.

The story continues

Financial update

Shareholders’ equity, excluding accumulated other comprehensive income (AOCI), increased 10.2% year-over-year to $7.5 billion as of March 31, 2024.
As of March 31, 2024, Globe Life had a book value per share, excluding AOCI, of $79, an increase of 12.3% year-over-year.

Operating return on equity, excluding AOCI, was 14.3% in the reported quarter, down 30 basis points year-over-year.

Share repurchase

During the reported quarter, Globe Life repurchased 0.1 million shares worth $15.6 million.

View 2024

Globe Life forecasts net operating income in the range of $11.50-$12.00 per share for the year ending December 31, 2024. The company anticipates share repurchases of approximately $350-$370 million in 2024.

How have estimates changed since then?

It turns out, revision estimates have flattened over the past month.

VGM results

Currently, Globe Life has a nice B growth score, a rating with the same momentum score. Plotting a somewhat similar path, the stock is rated an A on the value side, putting it in the top quintile for this investment strategy.

Overall, the company’s Total VGM Score is A. If you’re not focused on one strategy, this score should interest you.

Perspectives

Globe Life carries a Zacks Rank #3 (Hold). We expect a linear rate of return on the stock over the next few months.

Industry player performance

Globe Life is part of the Zacks Financial – Miscellaneous Services industry. Another stock in the same industry, American Express (AXP), has gained 1.7% over the past month. More than a month has passed since the company announced its results for the quarter ended March 2024.

In the most recent quarter, American Express reported revenues of $15.8 billion, representing a year-over-year change of +10.6%. EPS of $3.33 in the same period compared to $2.40 a year ago.

American Express is expected to report earnings per share of $3.21 for the current quarter, which would represent a year-over-year change of +11.1%. Over the past 30 days, the Zacks Consensus Estimate has moved -0.6%.

The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for American Express. The stock also has a VGM Rating of D.

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