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

Insider & Institutional Ownership

71.8% of Torchmark Corporation shares are owned by institutional investors. Comparatively, 23.4% of Fidelity and Guaranty Life shares are owned by institutional investors. 3.8% of Torchmark Corporation shares are owned by insiders. Comparatively, 0.6% of Fidelity and Guaranty Life shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Profitability

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

Net Margins Return on Equity Return on Assets
Torchmark Corporation 13.96% 11.55% 2.55%
Fidelity and Guaranty Life 13.61% 8.00% 0.55%

Dividends

Torchmark Corporation pays an annual dividend of $0.60 per share and has a dividend yield of 0.7%. Fidelity and Guaranty Life pays an annual dividend of $0.26 per share and has a dividend yield of 0.8%. Torchmark Corporation pays out 12.9% of its earnings in the form of a dividend. Fidelity and Guaranty Life pays out 7.9% 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 increased 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.

Volatility and Risk

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

Analyst Recommendations

This is a breakdown of current recommendations for Torchmark Corporation and Fidelity and Guaranty Life, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Torchmark Corporation 3 3 0 0 1.50
Fidelity and Guaranty Life 0 2 0 0 2.00

Torchmark Corporation presently has a consensus price target of $73.40, indicating a potential downside of 11.69%. Fidelity and Guaranty Life has a consensus price target of $26.40, indicating a potential downside of 15.38%. Given Torchmark Corporation’s higher possible upside, research analysts clearly believe Torchmark Corporation is more favorable than Fidelity and Guaranty Life.

Earnings and Valuation

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

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Torchmark Corporation $4.02 billion 2.41 $864.53 million $4.66 17.84
Fidelity and Guaranty Life $1.41 billion 1.29 $550.00 million $3.29 9.48

Torchmark Corporation 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 Corporation, indicating that it is currently the more affordable of the two stocks.

Summary

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

About Torchmark Corporation

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).

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.

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