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Great-West Lifeco Inc GWO

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Stock XTSE Rating as of
CAD 43.55 −0.06 (0.14%)
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Company Report

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Great-West Earnings: Higher Interest Rates and Stable Underwriting Drive Decent Results

Suryansh Sharma

No-moat-rated Great-West Life reported a decent set of numbers in the third quarter as the company benefited from higher interest rates and underwriting profitability remained solid. The company reported core earnings of CAD 0.95 billion or CAD 1.02 per share in the third quarter versus CAD 0.81 billion or CAD 0.87 per share in the third quarter of the previous year. The third-quarter results equated to an annualized core return on equity of 16.4%, which is in line with the company’s long-term target of 16%-17%. The company paid a quarterly dividend of CAD 0.52 per share in the third quarter of 2023, which represents a 5.2% dividend yield as per the current stock price. We are maintaining our CAD 38 fair value estimate for Great-West Life after incorporating the third-quarter results.

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Price vs Fair Value

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GWO is trading at a 15% premium.
Price
CAD 43.61
Fair Value
CAD 27.00
Uncertainty
Medium
1-Star Price
CAD 92.60
5-Star Price
CAD 21.20
Economic Moat
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Capital Allocation
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Bulls Say, Bears Say

Bulls

Of its Canadian peers, Great-West Lifeco has the highest returns on equity, which speaks to the strength of its management and a favorable business mix.

Bears

Fee pressure may damp the profitability of the firm's wealth and asset management business.

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Trading Information

Previous Close Price
CAD 43.61
Day Range
CAD 43.39–43.67
52-Week Range
CAD 29.58–43.95
Bid/Ask
CAD 43.54 / CAD 43.55
Market Cap
CAD 40.55 Bil
Volume/Avg
1.0 Mil / 2.5 Mil

Key Statistics

Price/Earnings (Normalized)
11.12
Price/Sales
1.88
Dividend Yield
4.70%
Dividend Yield (Forward)
4.77%
Total Yield
4.86%

Company Profile

Great-West Lifeco provides life insurance, health insurance, retirement products, asset management, recordkeeping services, and reinsurance products in Canada, the United States, and Europe. The Canada business contributes approximately 35% of adjusted earnings and has leading market positions in group insurance, group retirement, and individual insurance. The company operates the second-largest recordkeeping business under the Empower brand in the United States, with an earnings contribution from the country approximating 20%. Great-West Lifeco also offers various products across Europe markets with a strong presence in the U.K., Ireland, and Germany. The Europe segment contributes around 28% of adjusted earnings and the reinsurance business accounts for around 17% of adjusted earnings.
Sector
Financial Services
Industry
Insurance - Life
Stock Style Box
Large Value
Total Number of Employees
31,000
Website
https://www.greatwestlifeco.com

Competitors

Valuation

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Metric
GWO
SLF
MFC
Price/Earnings (Normalized)
 11.1210.847.62
Price/Book Value
 1.701.751.17
Price/Sales
 1.881.551.00
Price/Cash Flow
 5.8311.2811.56
Price/Earnings
GWO
SLF
MFC

Financial Strength

Metric
GWO
SLF
MFC
Quick Ratio
 ———
Current Ratio
 ———
Interest Coverage
 6.809.1110.40
Quick Ratio
No chart available

Profitability

Metric
GWO
SLF
MFC
Return on Assets (Normalized)
 0.38%1.15%0.76%
Return on Equity (Normalized)
 10.69%15.43%14.83%
Return on Invested Capital (Normalized)
 7.20%11.73%8.86%
Return on Assets
GWO
SLF
MFC

Insurance - Life Industry Comparables

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CILJF
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PIAIF
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AFL
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MET
MetLife IncYhkb$46.8 Bil
MFC
Manulife Financial CorpFkch$35.0 Bil
PRU
Prudential Financial IncSslw$34.6 Bil
PUK
Prudential PLC ADRZbgb$31.5 Bil