Critical Comparison: Torchmark (TMK) vs. Emergent Capital (EMGC)

Torchmark (NYSE: TMK) and Emergent Capital (OTCMKTS:EMGC) are both finance companies, but which is the better business? We will compare the two businesses based on the strength of their risk, profitability, earnings, dividends, institutional ownership, analyst recommendations and valuation.

Earnings & Valuation

This table compares Torchmark and Emergent Capital’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Torchmark $3.94 billion 2.71 $549.77 million $4.70 19.63
Emergent Capital $1.12 million 56.00 -$49.68 million N/A N/A

Torchmark has higher revenue and earnings than Emergent Capital.

Institutional and Insider Ownership

72.5% of Torchmark shares are held by institutional investors. 3.8% of Torchmark shares are held by company insiders. Comparatively, 33.3% of Emergent Capital shares are held by company 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.

Volatility & Risk

Torchmark has a beta of 1.01, suggesting that its stock price is 1% more volatile than the S&P 500. Comparatively, Emergent Capital has a beta of 0.05, suggesting that its stock price is 95% less volatile than the S&P 500.

Dividends

Torchmark pays an annual dividend of $0.60 per share and has a dividend yield of 0.7%. Emergent Capital does not pay a dividend. Torchmark pays out 12.8% of its earnings in the form of a dividend. Emergent Capital has raised its dividend for 8 consecutive years.

Profitability

This table compares Torchmark and Emergent Capital’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Torchmark 13.80% 11.60% 2.54%
Emergent Capital -42.49% -12.80% -3.98%

Analyst Ratings

This is a breakdown of recent ratings for Torchmark and Emergent Capital, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Torchmark 1 4 0 0 1.80
Emergent Capital 0 0 1 0 3.00

Torchmark currently has a consensus price target of $77.40, suggesting a potential downside of 16.10%. Given Torchmark’s higher possible upside, research analysts plainly believe Torchmark is more favorable than Emergent Capital.

Summary

Torchmark beats Emergent Capital on 9 of the 15 factors compared between the two stocks.

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).

About Emergent Capital

Emergent Capital, Inc., formerly Imperial Holdings, Inc., is a specialty finance company that invests in asset classes, primarily life settlements. The Company, through its subsidiary companies, owns a portfolio of approximately 630 life insurance policies (life settlements). The Company purchases individual policies and portfolios of life insurance policies and manages those assets based on actuarial and market data. The Company provides customized liquidity solutions to owners of illiquid financial assets in two markets, which include life finance and structured settlements. The Company focuses on lending to outright purchases of portfolios, to tertiary trades, as well as individual secondary market purchases. The Company invests in short and long-term life settlement investments.

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