Fidelity and Guaranty Life (NYSE: FGL) and Torchmark (NYSE:TMK) are both finance companies, but which is the superior stock? We will compare the two businesses based on the strength of their institutional ownership, profitability, analyst recommendations, dividends, earnings, risk and valuation.

Risk & Volatility

Fidelity and Guaranty Life has a beta of 0.89, meaning that its share price is 11% less volatile than the S&P 500. Comparatively, Torchmark has a beta of 1, meaning that its share price has a similar volatility profile to the S&P 500.

Insider & Institutional Ownership

23.4% of Fidelity and Guaranty Life shares are owned by institutional investors. Comparatively, 71.9% of Torchmark shares are owned by institutional investors. 0.6% of Fidelity and Guaranty Life shares are owned by insiders. Comparatively, 3.8% of Torchmark shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Earnings & Valuation

This table compares Fidelity and Guaranty Life and Torchmark’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Fidelity and Guaranty Life $1.41 billion 1.29 $550.00 million $3.29 9.47
Torchmark $4.02 billion 2.36 $864.53 million $4.66 17.50

Torchmark has higher revenue and earnings than Fidelity and Guaranty Life. Fidelity and Guaranty Life is trading at a lower price-to-earnings ratio than Torchmark, indicating that it is currently the more affordable of the two stocks.

Analyst Recommendations

This is a summary of recent ratings and recommmendations for Fidelity and Guaranty Life and Torchmark, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Fidelity and Guaranty Life 0 2 0 0 2.00
Torchmark 3 2 0 0 1.40

Fidelity and Guaranty Life presently has a consensus price target of $26.40, indicating a potential downside of 15.25%. Torchmark has a consensus price target of $71.00, indicating a potential downside of 12.92%. Given Torchmark’s higher probable upside, analysts clearly believe Torchmark is more favorable than Fidelity and Guaranty Life.

Profitability

This table compares Fidelity and Guaranty Life and Torchmark’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Fidelity and Guaranty Life 13.61% 8.00% 0.55%
Torchmark 13.64% 11.49% 2.52%

Dividends

Fidelity and Guaranty Life pays an annual dividend of $0.26 per share and has a dividend yield of 0.8%. Torchmark pays an annual dividend of $0.60 per share and has a dividend yield of 0.7%. Fidelity and Guaranty Life pays out 7.9% of its earnings in the form of a dividend. Torchmark pays out 12.9% 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. Fidelity and Guaranty Life has raised its dividend for 7 consecutive years. Fidelity and Guaranty Life is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Summary

Torchmark beats Fidelity and Guaranty Life on 12 of the 16 factors compared between the two stocks.

About Fidelity and Guaranty Life

Fidelity & Guaranty Life (FGL) is a holding company focused on obtaining controlling equity stakes in companies that operate across various industries. FGL’s primary business is the sale of individual life insurance products and annuities through independent agents, managing general agents, and specialty brokerage firms and in selected institutional markets. FGL’s principal products are deferred annuities (including fixed indexed annuity (FIA) contracts), immediate annuities and life insurance products. FGL markets products through its insurance subsidiaries, Fidelity & Guaranty Life Insurance Company (FGL Insurance) and Fidelity & Guaranty Life Insurance Company of New York (FGL NY Insurance). It distributes and services primarily fixed rate annuities, including FIAs. The Company provides FIA’s for pre-retirement wealth accumulation and post-retirement income management. Its life insurance provides wealth protection and transfer opportunities through indexed universal life products.

About Torchmark

Torchmark Corporation (Torchmark) is an insurance holding company. The Company, through its subsidiaries, provides a range of life and health insurance products and annuities to a base of customers. The Company’s segments include life insurance, health insurance, annuities and investment. The life insurance segment includes traditional and interest-sensitive whole life insurance as well as term life insurance. The Health insurance products are guaranteed-renewable and include Medicare Supplement, critical illness, accident and limited-benefit supplemental hospital and surgical coverage’s. Annuities include fixed-benefit contracts. The Company markets its insurance products through various distribution channels, each of which sells the products of its insurance segments. Its subsidiaries include American Income Life Insurance Company (American Income) and Liberty National Life Insurance Company (Liberty National).

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