Primerica, Inc. (NYSE: PRI)

Sector: Financial Services Industry: Insurance - Life CIK: 0001475922
Market Cap 19.72 Bn
P/B 12.55
P/E 133.62
P/S 17.82
ROIC (Qtr) 25.69
Div Yield % 0.43
Rev 1y % (Qtr) 8.49
Total Debt (Qtr) 646.01 Mn
Debt/Equity (Qtr) 0.28
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About

Primerica, Inc., a well-known provider of financial products and services, operates under the ticker symbols PRI and PRM on the New York Stock Exchange. The company specializes in serving middle-income households in the United States and Canada, offering financial protection, savings for retirement, and debt reduction solutions. Primerica's primary business activities revolve around underwriting and distributing term life insurance, as well as providing a range of mutual funds, annuities, managed investments, and other financial products. The company's...

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Investment thesis

Bull case

  • Strong operating cash flow of 833.57M provides robust 1.29x coverage of total debt 646.01M, indicating excellent debt servicing capability and financial flexibility.
  • Strong tangible asset base of 14.80B provides 22.91x coverage of total debt 646.01M, indicating robust asset backing and low credit risk.
  • Operating cash flow of 833.57M provides strong 32.90x coverage of stock compensation 25.33M, indicating sustainable incentive practices.
  • Operating cash flow of 833.57M provides exceptional 34.65x coverage of interest expenses 24.06M, showing strong debt service capability.
  • Robust free cash flow of 813.54M exceeds capital expenditure of 20.03M by 40.62x, indicating strong organic growth funding capability.

Bear case

  • Operating cash flow of 833.57M barely covers its investment activities of (166.49M), with a coverage ratio of -5.01, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • Operating cash flow of 833.57M provides thin coverage of dividend payments of (132.97M) with a -6.27 ratio, suggesting potential dividend sustainability issues if operational performance deteriorates.
  • Cash reserves of 644.86M provide limited coverage of acquisition spending of (2.77M), which is -232.97x, suggesting aggressive expansion might strain liquidity if market conditions deteriorate.
  • Free cash flow of 813.54M represents just -3024.33x of debt issuance (269000), suggesting concerning reliance on leverage rather than internal cash generation for growth.
  • Operating cash flow of 833.57M is outpaced by equity issuance of (427.75M) (-1.95 ratio), indicating concerning reliance on equity markets for funding operations.

Geographical Breakdown of Revenue (2024)

Contract with Customer, Sales Channel Breakdown of Revenue (2024)

Peer comparison

Companies in the Insurance - Life
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 MET Metlife Inc 81.60 Bn 15.56 1.20 20.23 Bn
2 AFL Aflac Inc 78.90 Bn 18.62 3.49 8.69 Bn
3 MFC Manulife Financial Corp 63.37 Bn 16.53 2.20 10.71 Bn
4 PUK Prudential Plc 38.02 Bn 21.76 0.58 -
5 PRU Prudential Financial Inc 36.75 Bn 10.28 0.60 32.56 Bn
6 PRI Primerica, Inc. 19.72 Bn 133.62 17.82 0.65 Bn
7 UNM Unum Group 18.81 Bn 64.52 1.80 3.77 Bn
8 GL Globe Life Inc. 14.78 Bn 13.56 2.87 2.71 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 1.34 0.25
EV to Cash from Ops. EV/CFO 608.63 38.74
EV to Debt EV to Debt 30.81 4.98
EV to EBIT EV/EBIT 77.13 18.23
EV to EBITDA EV/EBITDA 60.29 14.59
EV to Free Cash Flow [EV/FCF] EV/FCF 506.71 34.05
EV to Market Cap EV to Market Cap 1.01 1.00
EV to Revenue EV/Rev 17.98 2.53
Price to Book Value [P/B] P/B 12.55 2.19
Price to Earnings [P/E] P/E 133.62 26.16
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Div Coverage (Qtr) 5.42 3.59
Dividend Payout Ratio % Div Payout % (Qtr) 18.50 22.49
Dividend per Basic Share Div per Share (Qtr) 4.02 1.48
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 16.01 0.41
Interest Coverage Int. cover (Qtr) 40.29 7.54
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) 57.30 -27.98
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) 17.22 19.69
Dividend Growth (1y) % Div 1y % (Qtr) 31.80 15.89
EBIAT Growth (1y) % EBIAT 1y % (Qtr) 56.45 89.68
EBITDA Growth (1y) % EBITDA 1y % (Qtr) 0.84 64.87
EBIT Growth (1y) % EBIT 1y % (Qtr) 39.46 82.78
EBT Growth (1y) % EBT 1y % (Qtr) 41.18 344.70
EPS Growth (1y) % EPS 1y % (Qtr) 65.98 2,261.01
FCF Growth (1y) % FCF 1y % (Qtr) 3.56 186.52
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) 8.63 50.91
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.22 0.13
Cash Payout Ratio Cash Payout (Qtr) 0.16 0.12
Cash Ratio Cash Ratio 0.00 0.00
Current Ratio Current Ratio 0.00 0.00
Debt to Equity Ratio Debt/Equity (Qtr) 0.28 0.49
Interest Cover Ratio Int Coverage (Qtr) 40.29 7.54
Times Interest Earned Times Interest Earned (Qtr) 40.29 7.54
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 30.60 15.04
EBIT Margin % EBIT Margin % (Qtr) 30.05 14.45
EBT Margin % EBT Margin % (Qtr) 29.30 12.36
Gross Margin % Gross Margin % (Qtr) 80.30 45.61
Net Profit Margin % Net Margin % (Qtr) 22.40 10.89