Great-West Lifeco Inc 2

I do not own this stock of Great-West Lifeco (TSX-GWO), but a do have stock in Power Financial (TSX-PWF), the parent company. As of December 31, 2011, Power Financial owns 68.2% of this company. This is my first review of this stock after the December 2011 statements have been received.

I looked at insider trading and find a bit of stock bought by a director under insider buying. There was no insider selling. In the last 3 months insider have been retaining their options and this is a positive. Not only do insiders have stock options, but they have Deferred Share Units and Executive Performance Share Units. There are an awful lot of insiders with stock options. Also Paul Desmarais is shown as having some 72% of the outstanding shares.

There are 134 institutions that hold some 6.8% of the outstanding shares. They have bought and sold shares over the past 3 months and they have sold a net of 1% of their holding during this period. However, there were more buyers than sellers. I look at this information as rather neutral.

The 5 year median low and high Price/Earnings Ratios are 12.55 and 16.34. The current price of $21.07 has a P/E Ratio of 10.13 and so this shows a current cheap stock price.

I get a Graham Price of $24.37. The current stock price of $21.07 is some 13.5% lower. The 10 year low, median and high difference between the Graham Price and the stock price is the stock price being 17%, 32% and 49% higher than the Graham price. By this measure the current stock price is cheap.

The 10 year median Price/Book Value Ratio is 2.81. The current P/B Ratio is 1.66 and only 59% of the 10 year median ratio. This low P/B Ratio points to a current cheap stock price.

The current dividend yield is 5.84%. The 5 year median dividend yield is 4.65%, a value which is 25.5% lower. This current high dividend yield also points to a cheap current stock price. (The 10 year median dividend yield is lower at just 3.02%.)

I find analysts’ recommendations of Strong Buy, Buy, Hold and Underperform. Most of the recommendations are a Hold and that is the consensus recommendation. One analyst said he lowered estimates on this company because Q1 of 2012 was weaker than he had expected. Earnings were toward the lower end of the estimates.

Information on the 1st Quarterly results are at the G&M. They did mostly better than the 1st Quarter of 2011.

One analyst with a Hold recommendation has a 12 months stock price of $25.00. The mean target price is $25.60. Here is what the National Bank Financial said about Great-West Lifeco on April 2012 . Peter Routledge thought this company was a less of a risk in the short term than other Life Insurers. Here is what Michael Goldberg, analyst at Desjardins Securities had to say about Great-West Lifeco.

Estimates have been tracking downward over the past 90 days. However, a number of analysts have also said they like this life company better than other ones. Everyone feels that the dividend is safe and it is a very good yield. The stock is cheap, but it would be a long term buy. I am holding on to the parent company’s stock of Power Financial. I expect to do well in this stock for the long term.

Great-West Lifeco is a financial services holding company with interests in the life insurance, health insurance, retirement savings, investment management and reinsurance businesses. The Corporation has operations in Canada, the United States, Europe and Asia through The Great-West Life Assurance Company, London Life Insurance Company, The Canada Life Assurance Company, Great-West Life & Annuity Insurance Company and Putnam Investments, LLC. Lifeco and are members of the Power Financial Corporation group of companies. Its web site is here Great-West Lifeco . See my spreadsheet at gwo.htm.

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website for stocks followed and investment notes. Follow me on twitter.