Globe Life shares fell by -15.5% during the day's morning session, and are now trading at a price of $88.62. Is it time to buy the dip? To better answer that question, it's essential to check if the market is valuing the company's shares fairly in terms of its earnings and equity levels.
Globe Life Is Reasonably Valued:
Globe Life Inc., through its subsidiaries, provides various life and supplemental health insurance products, and annuities to lower middle- and middle-income families in the United States. The company belongs to the Finance sector, which has an average price to earnings (P/E) ratio of 12.38 and an average price to book (P/B) ratio of 1.58. In contrast, Globe Life has a trailing 12 month P/E ratio of 8.8 and a P/B ratio of 1.85.
When we divideGlobe Life's P/E ratio by its expected five-year EPS growth rate, we obtain a PEG ratio of 0.61, which indicates that the market is undervaluing the company's projected growth (a PEG ratio of 1 indicates a fairly valued company). Your analysis of the stock shouldn't end here. Rather, a good PEG ratio should alert you that it may be worthwhile to take a closer look at the stock.
A Positive EPS Growth Rate but Not Enough Current Assets to Cover Current Liabilities:
| 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | |
|---|---|---|---|---|---|---|
| Revenue (M) | $4,304 | $4,528 | $4,738 | $4,100 | $4,303 | $4,456 |
| Interest Income (M) | $90 | $84 | $87 | $83 | $90 | $102 |
| Net Margins | 16% | 17% | 15% | 18% | 17% | 22% |
| Net Income (M) | $701 | $761 | $732 | $745 | $740 | $971 |
| Depreciation & Amort. (M) | $13 | $16 | $17 | $20 | $21 | $21 |
| Diluted Shares (M) | 115 | 111 | 107 | 103 | 99 | 96 |
| Earnings Per Share | $6.09 | $6.83 | $6.82 | $7.22 | $7.47 | $10.07 |
| EPS Growth | n/a | 12.15% | -0.15% | 5.87% | 3.46% | 34.81% |
| Avg. Price | $81.92 | $86.96 | $82.56 | $94.38 | $98.61 | $92.78 |
| P/E Ratio | 13.32 | 12.6 | 12.12 | 13.09 | 13.24 | 9.22 |
| Free Cash Flow (M) | $1,233 | $1,322 | $1,435 | $1,399 | $1,394 | $1,433 |
| CAPEX (M) | $45 | $42 | $42 | $38 | $28 | $50 |
| Total Debt (M) | $1,672 | $1,657 | $1,923 | $2,176 | $2,243 | $2,116 |
| Current Ratio | 0.39 | 0.25 | 0.37 | 0.19 | 0.21 | 0.21 |
