Globe Life Inc. Faces Challenges Amid Market Resilience
Despite a solid customer base, Globe Life Inc.’s financial performance lags behind key market indices.
Valued at a market cap of $9.2 billion, Globe Life Inc. (GL) is a financial services holding company that provides life insurance, annuities, and supplemental health insurance products. The McKinney, Texas-based company serves middle-income families through its subsidiaries and various distribution channels.
Over the past 52 weeks, shares of Globe Life have struggled compared to the broader market. The stock has dipped 6.4%, while the S&P 500 Index ($SPX) has rallied 30.4%. In 2024, GL shares are down 10.3%, contrasting with the SPX’s 23.1% gain year-to-date.
Furthermore, Globe Life has faced tougher competition against the Financial Select Sector SPDR Fund’s (XLF) 43.8% return over the past year and a 32.6% gain year-to-date.
Recently, Globe Life reported better-than-expected adjusted earnings of $3.49 per share for Q3 on October 23. However, the stock dropped 1.3% the following day. The decline was triggered by a revenue miss, with operating revenues of $1.5 billion falling short of expectations. Additionally, a 10% year-over-year decline in health insurance underwriting margins raised concerns about profitability. Increased administrative costs, which rose 18.6% year-over-year, also contributed to negative investor sentiment.
Looking ahead, analysts predict that for the current fiscal year ending in December, GL’s EPS is expected to grow 15.6% year-over-year to $12.31. The company’s record of earnings surprises has been mixed; it has exceeded expectations in three of the last four quarters while falling short on one occasion.
Among the 11 analysts covering Globe Life stock, the consensus rating is a “Moderate Buy.” This rating includes six “Strong Buys,” one “Moderate Buy,” and four “Holds.”
This recommendation is slightly more positive than three months ago when there were just five “Strong Buy” ratings on the stock.
On November 14, Evercore ISI raised Globe Life’s price target to $132 while maintaining an “In Line” rating. The firm cited a potential re-evaluation of the life insurance sector fueled by broader investor interest, reduced risks from alternative managers, and favorable market conditions post-election.
As of this writing, GL is trading below the average price target of $128.64. The highest target on the Street is set at $188, suggesting a potential upside of 72.2% from current levels.
On the date of publication, Sohini Mondal did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information, please view the Barchart Disclosure Policy here.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
