We came across a bullish thesis on Primerica, Inc. (PRI) on Substack by Max Dividends. In this article, we will summarize the bulls’ thesis on PRI. Primerica, Inc. (PRI)’s share was trading at $276.77 as of Feb 25th. PRI’s trailing P/E was 13.19 according to Yahoo Finance.
A closeup of a couple, highlighting the companies pension and life insurance solutions.
Primerica (PRI) has once again demonstrated its commitment to shareholder returns with a 15.6% increase in its quarterly dividend to $1.04 per share, marking its largest recent hike. The stock now offers a 1.43% forward yield, with the next dividend payment scheduled for March 14. Since initiating dividends in 2010, Primerica has consistently raised payouts, reflecting confidence in its growing cash flow. In addition to dividends, the company actively repurchases shares, having bought back $44.4 million worth last quarter and a total of $425 million in 2024. A new $450 million buyback authorization for 2025 further solidifies its capital return strategy.
Founded in 1977 as A.L. Williams & Associates, Primerica has grown into a leading provider of financial services, specializing in term life insurance, investment products, and senior health plans. The company operates through a direct sales model with over 130,000 representatives across the U.S. and Canada, focusing on middle-income households. Since its public listing in 2010, Primerica has established itself as a financial powerhouse with a resilient business model and a strong track record of profitability. Its ability to consistently grow dividends while maintaining a low payout ratio of 17.79% underscores its disciplined financial management. Over the past five years, dividends have surged by 143%, demonstrating a balance between reinvesting in growth and rewarding investors.
Primerica’s strong institutional ownership, with nearly 90% of shares held by institutions, highlights investor confidence. Leading shareholders include The Vanguard Group (16.3%), BlackRock (12.9%), and State Street Corporation (10.1%). The company also boasts a financial score of 95/99, reflecting robust fundamentals, steady sales growth, and increasing operating profits. Despite economic uncertainties, Primerica has continued to expand, leveraging digital transformation and investments in retirement planning services. The company allocated $45 million to digital enhancements, ensuring that its platform remains competitive in a rapidly evolving financial landscape.
The financial services industry is projected to reach $22.3 trillion by 2025, with direct sales expected to grow at an annualized rate of 6.8% through 2027. Primerica is well-positioned to capitalize on these trends, supported by a scalable business model and a highly engaged salesforce. Its revenue stands at $2.48 billion, with a projected compound annual growth rate of 7.2%. Expanding its agent network at a 9.5% annual rate, Primerica is reinforcing its market presence while maintaining cost efficiency.
In 2023-24, Primerica delivered solid financial results, with Q4 revenue rising 17% to $803.4 million and adjusted EPS increasing 18% to $4.71. Operating margins remain strong at 35.01%, and the company’s return on equity of 32.48% signals efficient capital deployment. With 15 consecutive years of dividend increases and a robust buyback program, Primerica stands out as a compelling long-term investment. While its valuation may appear stretched, its consistent profitability, shareholder-friendly policies, and market leadership make it an attractive stock for income-focused investors seeking both stability and growth potential.
Primerica, Inc. (PRI) is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 42 hedge fund portfolios held PRI at the end of the third quarter which was 29 in the previous quarter. While we acknowledge the risk and potential of PRI as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than PRI but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article was originally published at Insider Monkey.