Globe Life Is Trading at a Discount: Time to Load Up or Hold Off?

Shares of Globe Life Inc. GL are trading at a discount compared to the Zacks Insurance - Accident and Health industry. Its forward price-to-earnings value of 9.58X is lower than the industry average of 12.4X. Image Source: Zacks Investment ResearchHowever, shares of other insurers like Aflac Incorporated AFL and AMERISAFE, Inc. AMSF are trading at a multiple higher than the industry average, while Unum Group UNM shares are trading at a discount.GL’s Price PerformanceShares of Globe Life have gained 28.1% in the year-to-date period, outperforming its industry, the sector and the Zacks S&P 500 Composite’s growth of 5.3%, 13.6% and 13.4%, respectively.The insurer has a market capitalization of $11.6 billion. The average volume of shares traded in the last three months was 0.6 million.GL vs. Industry, Sector & S&P 500 YTD Image Source: Zacks Investment ResearchProjections for GLThe Zacks Consensus Estimate for 2025 revenues is pegged at $6.04 billion, implying a year-over-year improvement of 4.6%. The consensus estimate for GL’s current-year earnings is pegged at $14.43 per share, up 16.7% from the year-ago reported figure. The consensus estimate for 2026 earnings per share and revenues indicates an increase of 4.6% and 5.1%, respectively, from 2025 estimates.Analyst Sentiment on GLThe Zacks Consensus Estimate for 2025 earnings per share has moved up by 0.8% in the past month, while the same for 2026 earnings has remained flat. Image Source: Zacks Investment ResearchAverage Target Price for GL Suggests UpsideBased on short-term price targets offered by 13 analysts, the Zacks average price target is $160.15 per share. The average indicates a potential 13.7% upside from the last closing price. Image Source: Zacks Investment ResearchGL’s Favorable Return on CapitalReturn on equity (ROE) for the trailing 12 months was 21.2%, comparing favorably with the industry’s 15%. This reflects its efficiency in utilizing shareholders’ funds.Return on invested capital in the trailing 12 months was 12.5%, better than the industry average of 7.3%, reflecting GL’s efficiency in utilizing funds to generate income.Key Points to Note for GLGlobe Life’s growth story is being shaped by a few core drivers, starting with its sharp focus on niche markets and the reach of its distribution network. These have laid the foundation for stronger premiums at American Income Life through an expanding agency force, while Liberty National adds stability with steady premium growth.The focus on niche markets also positions Globe Life in a relatively low-competition space, selling simple life insurance products to middle- and lower-middle-income households. Coupled with cost discipline and an experienced workforce, these advantages help the company maintain an edge over competitors. Life insurance remains the cornerstone of the business, with premium revenues expected to grow around 3.5% in 2025.Building on its strong foundation, American Income Life continues to drive growth through agency expansion, strengthened middle management and new sales technologies. For 2025, Globe Life anticipates mid-single-digit net life sales growth at American Income Life and Liberty National, modest gains in direct-to-consumer and solid health sales, with Family Heritage and United American expected to deliver double-digit growth.Alongside premium growth, Globe Life has strengthened its investment income, which witnessed a 6% compound annual growth rate over the three years ended in 2024, supported by higher invested assets and improved yields. Sequential gains are expected in the second half of 2025, driven by last year’s annuity reinsurance transaction and stronger dividend distributions from its insurance subsidiaries.Headwinds Faced by GLWhile Globe Life continues to grow premiums and investment income, rising expenses have begun to put pressure on margins. Increases in policyholder benefits, amortization of deferred acquisition costs, commissions, premium taxes, other operating expenses and interest costs have collectively contributed to higher overall expenses, highlighting the need to monitor profitability alongside growth.Following the pressure from rising expenses, Globe Life has also seen its long-term debt increase in recent years, pushing its debt-to-capital ratio to 33.99, well above the industry average of 24.98. With a times interest earned of 10.63, below the industry average of 14.87, the company’s earnings may be stretched in covering interest obligations. Maintaining uninterrupted debt servicing is critical, as any shortfall could affect creditworthiness and financial stability.Wealth Distribution of GLGL continues to emphasize shareholder value creation through steady capital returns. The company has increased its dividend five times over the past five years, resulting in a five-year annualized growth rate of 6.9%, with a current payout ratio of 8%.ConclusionOverall, Globe Life is building on its niche focus, agency expansion and stable premium growth to strengthen its core business. However, rising expenses and increasing debt levels highlight profitability and financial stability as key challenges ahead.Ongoing headwinds limit meaningful upside for Globe Life. It is therefore wise to adopt a wait-and-see approach on this Zacks Rank #3 (Hold) stock. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.See our %%CTA_TEXT%% report – free today!7 Best Stocks for the Next 30 DaysWant the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Aflac Incorporated (AFL): Free Stock Analysis Report Unum Group (UNM): Free Stock Analysis Report AMERISAFE, Inc. (AMSF): Free Stock Analysis Report Globe Life Inc. (GL): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks