As you might know, Globe Life Inc. (NYSE:GL) just kicked off its latest quarterly results with some very strong numbers. The company beat both earnings and revenue forecasts, with revenue of US$1.2b, some 2.7% above estimates, and statutory earnings per share (EPS) coming in at US$1.62, 26% ahead of expectations. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Globe Life after the latest results.
Taking into account the latest results, the current consensus from Globe Life's six analysts is for revenues of US$4.71b in 2020, which would reflect a reasonable 2.5% increase on its sales over the past 12 months. Statutory earnings per share are forecast to decrease 3.1% to US$6.55 in the same period. Before this earnings report, the analysts had been forecasting revenues of US$4.61b and earnings per share (EPS) of US$6.19 in 2020. It looks like there's been a modest increase in sentiment following the latest results, withthe analysts becoming a bit more optimistic in their predictions for both revenues and earnings.
It will come as no surprise to learn that the analysts have increased their price target for Globe Life 7.5% to US$89.38on the back of these upgrades. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. The most optimistic Globe Life analyst has a price target of US$109 per share, while the most pessimistic values it at US$80.00. This shows there is still a bit of diversity in estimates, but analysts don't appear to be totally split on the stock as though it might be a success or failure situation.
Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. It's pretty clear that there is an expectation that Globe Life's revenue growth will slow down substantially, with revenues next year expected to grow 2.5%, compared to a historical growth rate of 5.0% over the past five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 3.9% next year. So it's pretty clear that, while revenue growth is expected to slow down, the wider industry is also expected to grow faster than Globe Life.
The Bottom Line
The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards Globe Life following these results. Fortunately, they also upgraded their revenue estimates, although our data indicates sales are expected to perform worse than the wider industry. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.
With that in mind, we wouldn't be too quick to come to a conclusion on Globe Life. Long-term earnings power is much more important than next year's profits. We have forecasts for Globe Life going out to 2022, and you can see them free on our platform here.
You can also view our analysis of Globe Life's balance sheet, and whether we think Globe Life is carrying too much debt, for free on our platform here.
This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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