Primerica (NYSE: PRI) and China Life Insurance Company Limited (NYSE:LFC) are both mid-cap finance companies, but which is the better investment? We will compare the two businesses based on the strength of their profitability, risk, institutional ownership, earnings, analyst recommendations, valuation and dividends.
Primerica pays an annual dividend of $0.76 per share and has a dividend yield of 0.9%. China Life Insurance Company Limited pays an annual dividend of $0.14 per share and has a dividend yield of 0.9%. Primerica pays out 15.5% of its earnings in the form of a dividend. China Life Insurance Company Limited pays out 27.5% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Primerica has increased its dividend for 3 consecutive years and China Life Insurance Company Limited has increased its dividend for 6 consecutive years. Primerica is clearly the better dividend stock, given its higher yield and lower payout ratio.
This table compares Primerica and China Life Insurance Company Limited’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|China Life Insurance Company Limited||3.40%||6.37%||0.73%|
Insider and Institutional Ownership
97.1% of Primerica shares are held by institutional investors. Comparatively, 0.2% of China Life Insurance Company Limited shares are held by institutional investors. 1.2% of Primerica shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.
Valuation & Earnings
This table compares Primerica and China Life Insurance Company Limited’s revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|Primerica||$1.62 billion||2.26||$411.57 million||$4.90||16.45|
|China Life Insurance Company Limited||$89.10 billion||0.26||$5.33 billion||$0.51||30.00|
China Life Insurance Company Limited has higher revenue and earnings than Primerica. Primerica is trading at a lower price-to-earnings ratio than China Life Insurance Company Limited, indicating that it is currently the more affordable of the two stocks.
This is a summary of current ratings for Primerica and China Life Insurance Company Limited, as reported by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|China Life Insurance Company Limited||0||4||2||1||2.57|
Primerica presently has a consensus price target of $84.67, indicating a potential upside of 5.05%. Given Primerica’s higher possible upside, equities research analysts clearly believe Primerica is more favorable than China Life Insurance Company Limited.
Risk & Volatility
Primerica has a beta of 1.14, meaning that its share price is 14% more volatile than the S&P 500. Comparatively, China Life Insurance Company Limited has a beta of 1.37, meaning that its share price is 37% more volatile than the S&P 500.
Primerica beats China Life Insurance Company Limited on 10 of the 18 factors compared between the two stocks.
Primerica Company Profile
Primerica Inc. (Primerica) is a distributor of financial products to middle-income households in the United States and Canada. The Company operates through three segments: Term Life Insurance, Investment and Savings Products, and Corporate and Other Distributed Products. The Term Life Insurance segment includes underwriting profits on its in-force book of term life insurance policies, net of reinsurance, which are underwritten by its life insurance company subsidiaries. The Investment and Savings Products segment includes retail and managed mutual funds, and annuities distributed through licensed broker-dealer subsidiaries and includes segregated funds, an individual annuity savings product that it underwrites in Canada through Primerica Life Insurance Company of Canada (Primerica Life Canada). In the United States, it distributes mutual fund and annuity products of various third-party companies. It also earns fees for account servicing on a subset of the mutual funds it distributes.
China Life Insurance Company Limited Company Profile
China Life Insurance Company Limited is a life insurance company. The Company provides a range of insurance products, including individual and group life insurance, health insurance and accident insurance products. It operates through three segments: Life Insurance, Health Insurance, and Accident Insurance. Its Life Insurance segment provides participating and non-participating life insurance and annuities to individuals and groups. Its Health Insurance segment provides short-term and long-term health insurance to individuals and groups. Its Accident Insurance segment provides short-term and long-term accident insurance to individuals and groups.
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