TSX:GWO

Stock Analysis Report

Great-West Lifeco

Executive Summary

Great-West Lifeco Inc., a financial services holding company, engages in life and health insurance, asset management, investment and retirement savings, and reinsurance businesses in Canada, the United States, and Europe.

Rewards

Trading at 48.8% below its fair value

Earnings are forecast to grow 9.86% per year

Pays a high and reliable dividend of 4.9%

Risk Analysis

No risks detected for GWO from our risk checks.


Snowflake Analysis

Established dividend payer and good value.


Similar Companies

Share Price & News

How has Great-West Lifeco's share price performed over time and what events caused price changes?


Latest Share Price and Events

Stable Share Price: GWO has not had significant price volatility in the past 3 months.


Market Performance


7 Day Return

2.6%

GWO

1.3%

CA Insurance

0.8%

CA Market


1 Year Return

17.8%

GWO

24.1%

CA Insurance

10.6%

CA Market

Return vs Industry: GWO underperformed the Canadian Insurance industry which returned 25% over the past year.

Return vs Market: GWO exceeded the Canadian Market which returned 10.4% over the past year.


Shareholder returns

GWOIndustryMarket
7 Day2.6%1.3%0.8%
30 Day3.8%2.7%2.1%
90 Day10.8%10.4%6.6%
1 Year24.3%17.8%29.3%24.1%14.1%10.6%
3 Year9.4%-5.3%23.4%9.7%17.0%6.4%
5 Year33.6%7.1%50.5%25.0%38.5%18.2%

Price Volatility Vs. Market

How volatile is Great-West Lifeco's share price compared to the market and industry in the last 5 years?


Simply Wall St News

Valuation

Is Great-West Lifeco undervalued compared to its fair value and its price relative to the market?

48.1%

Undervalued compared to fair value


Share Price vs. Fair Value

Below Fair Value: GWO (CA$33.71) is trading below our estimate of fair value (CA$65.88)

Significantly Below Fair Value: GWO is trading below fair value by more than 20%.


Price To Earnings Ratio

PE vs Industry: GWO is good value based on its PE Ratio (12.7x) compared to the Insurance industry average (15x).

PE vs Market: GWO is good value based on its PE Ratio (12.7x) compared to the Canadian market (15.8x).


Price to Earnings Growth Ratio

PEG Ratio: GWO is poor value based on its PEG Ratio (1.3x)


Price to Book Ratio

PB vs Industry: GWO is overvalued based on its PB Ratio (1.6x) compared to the CA Insurance industry average (1.3x).


Next Steps

Future Growth

How is Great-West Lifeco forecast to perform in the next 1 to 3 years based on estimates from 10 analysts?

10.8%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: GWO's forecast earnings growth (9.9% per year) is above the savings rate (1.4%).

Earnings vs Market: GWO's earnings (10.8% per year) are forecast to grow faster than the Canadian market (10% per year).

High Growth Earnings: GWO's earnings are forecast to grow, but not significantly.

Revenue vs Market: GWO's revenue (11.2% per year) is forecast to grow faster than the Canadian market (5% per year).

High Growth Revenue: GWO's revenue (11.2% per year) is forecast to grow slower than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: GWO's Return on Equity is forecast to be low in 3 years time (14.3%).


Next Steps

Past Performance

How has Great-West Lifeco performed over the past 5 years?

-0.5%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: GWO has high quality earnings.

Growing Profit Margin: GWO's current net profit margins (5.6%) are lower than last year (5.8%).


Past Earnings Growth Analysis

Earnings Trend: GWO's earnings have declined by -0.5% per year over the past 5 years.

Accelerating Growth: GWO's has had negative earnings growth over the past year, so it can't be compared to its 5-year average.

Earnings vs Industry: GWO had negative earnings growth (-3.3%) over the past year, making it difficult to compare to the Insurance industry average (-0.4%).


Return on Equity

High ROE: GWO's Return on Equity (10.8%) is considered low.


Return on Assets


Return on Capital Employed


Next Steps

Financial Health

How is Great-West Lifeco's financial position? (This company is analysed differently as a bank or financial institution)


Financial Position Analysis


Debt to Equity History and Analysis


Balance Sheet

Inventory Level: GWO has a low level of unsold assets or inventory.

Debt Coverage by Assets: GWO's debt is covered by short term assets (assets are 20.5x debt).


Financial Institutions Analysis

Asset Level: GWO's level of assets compared to its equity is moderate.

Allowance for Bad Loans: Insufficient data to determine if GWO has a sufficient allowance for bad loans.

Low Risk Liabilities: GWO reports no customer deposits, loans are made up entirely of externally borrowed funds.

Loan Level: Insufficient data to determine if GWO has an acceptable proportion of non-loan assets held.

Low Risk Deposits: GWO has advanced significantly more loans than the customer deposits it holds.

Level of Bad Loans: Insufficient data to determine if GWO has an appropriate level of bad loans.


Next Steps

Dividend

What is Great-West Lifeco's current dividend yield, its reliability and sustainability?

4.78%

Current Dividend Yield


Dividend Yield vs Market

company4.8%marketbottom25%1.9%markettop25%5.5%industryaverage3.7%forecastin3Years5.1%

Current dividend yield vs market & industry

Notable Dividend: GWO's dividend (4.9%) is higher than the bottom 25% of dividend payers in the Canadian market (1.88%).

High Dividend: GWO's dividend (4.9%) is low compared to the top 25% of dividend payers in the Canadian market (5.48%).


Stability and Growth of Payments

Stable Dividend: GWO's dividends per share have been stable in the past 10 years.

Growing Dividend: GWO's dividend payments have increased over the past 10 years.


Current Payout to Shareholders

Dividend Coverage: With its reasonable payout ratio (61.2%), GWO's dividend payments are covered by earnings.


Future Payout to Shareholders

Future Dividend Coverage: GWO's dividends in 3 years are forecast to be covered by earnings (54.5% payout ratio).


Next Steps

Management

What is the CEO of Great-West Lifeco's salary, the management and board of directors tenure and is there insider trading?

4.4yrs

Average management tenure


CEO

Paul Mahon (55yo)

6.7yrs

Tenure

CA$7,116,415

Compensation

Mr. Paul Anthony Mahon has been the Chief Executive Officer and President of London Life Insurance Company, Canada Life Financial Corporation, Great-West Lifeco Inc. and Canada Life Limited since May 3, 20 ...


CEO Compensation Analysis

Compensation vs Market: Paul's total compensation ($USD5.45M) is about average for companies of similar size in the Canadian market ($USD7.32M).

Compensation vs Earnings: Paul's compensation has been consistent with company performance over the past year.


Management Age and Tenure

4.4yrs

Average Tenure

Experienced Management: GWO's management team is considered experienced (4.4 years average tenure).


Board Age and Tenure

7.2yrs

Average Tenure

64yo

Average Age

Experienced Board: GWO's board of directors are considered experienced (7.2 years average tenure).


Insider Trading

Insider Buying: GWO insiders have bought more shares than they have sold in the past 3 months.


Recent Insider Transactions

BuyCA$82,62504 Dec 19
James Singh
EntityIndividual
Shares2,500
Max PriceCA$33.05
BuyCA$11,483,36502 Oct 19
Great-West Lifeco U.S. Holdings, L.P.
EntityCompany
Shares368,883
Max PriceCA$31.13
SellCA$11,470,78602 Oct 19
Great-West Lifeco U.S. Holdings, L.P.
EntityCompany
Shares368,883
Max PriceCA$31.10

Ownership Breakdown

Dilution of Shares: Shareholders have not been meaningfully diluted in the past year.


Management Team

  • Grace Palombo (55yo)

    Executive VP & Chief HR Officer

    • Tenure: 5.2yrs
  • Marlene Klassen

    Assistant Vice President of Communications

    • Raman Srivastava

      Executive VP & Global Chief Investment Officer

      • Tenure: 2.4yrs
      • Compensation: CA$3.46m
    • Paul Mahon (55yo)

      President

      • Tenure: 6.7yrs
      • Compensation: CA$7.12m
    • Garry MacNicholas

      Executive VP & CFO

      • Tenure: 4.8yrs
      • Compensation: CA$2.40m
    • Gordon Menzie

      Senior Vice-President of Corporate Finance & Treasury

      • Graham Bird

        Executive VP & Chief Risk Officer

        • Tenure: 4.8yrs
        • Compensation: CA$2.67m
      • Philip Armstrong

        Executive VP & Global Chief Information Officer

        • Tenure: 4yrs
        • Compensation: CA$3.01m
      • Anne Sonnen

        Senior VP & Chief Compliance Officer

        • Tenure: 2.1yrs
      • Sharon Geraghty

        Executive VP & General Counsel

        • Tenure: 1.9yrs
        • Compensation: CA$3.51m

      Board Members

      • Marcel Coutu (65yo)

        Independent Director

        • Tenure: 12.7yrs
        • Compensation: CA$325.88k
      • Bob Reynolds (67yo)

        President & CEO of Putnam Investments LLC and Chair of Great West Lifeco U.S. LLC

        • Tenure: 0.8yrs
      • André Desmarais (62yo)

        Director

        • Tenure: 27.8yrs
        • Compensation: CA$52.69k
      • Siim Vanaselja (62yo)

        Independent Director

        • Tenure: 5.7yrs
        • Compensation: CA$534.26k
      • Brian Walsh (65yo)

        Independent Director

        • Tenure: 10.7yrs
        • Compensation: CA$408.04k
      • Paul Desmarais (65yo)

        Director

        • Tenure: 33.7yrs
        • Compensation: CA$291.88k
      • Greg Tretiak (63yo)

        Director

        • Tenure: 7.7yrs
        • Compensation: CA$360.00k
      • Robert Orr (60yo)

        Chairman of the Board

        • Tenure: 6.7yrs
        • Compensation: CA$427.88k
      • Tim Ryan (73yo)

        Independent Director

        • Tenure: 5.7yrs
        • Compensation: CA$416.25k
      • Paul Mahon (55yo)

        President

        • Tenure: 6.7yrs
        • Compensation: CA$7.12m

      Company Information

      Great-West Lifeco Inc.'s company bio, employee growth, exchange listings and data sources


      Key Information

      • Name: Great-West Lifeco Inc.
      • Ticker: GWO
      • Exchange: TSX
      • Founded: 1891
      • Industry: Life and Health Insurance
      • Sector: Insurance
      • Market Cap: CA$32.005b
      • Shares outstanding: 926.34m
      • Website: https://www.greatwestlifeco.com

      Number of Employees


      Location

      • Great-West Lifeco Inc.
      • 100 Osborne Street North
      • Winnipeg
      • Manitoba
      • R3C 1V3
      • Canada

      Listings

      TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
      GWOTSX (The Toronto Stock Exchange)YesCommon SharesCACADJun 1986
      GWSDB (Deutsche Boerse AG)YesCommon SharesDEEURJun 1986
      GWLI.FOTCPK (Pink Sheets LLC)YesCommon SharesUSUSDJun 1986
      0AH3LSE (London Stock Exchange)YesCommon SharesGBCADJun 1986
      GWO.PRITSX (The Toronto Stock Exchange)PFD 1ST SER ICACADApr 2006
      GWO.PRNTSX (The Toronto Stock Exchange)5YR RATE PFD-NCACADNov 2010
      GWO.PRQTSX (The Toronto Stock Exchange)1ST PFD SER Q %CACADJul 2012
      GWO.PRSTSX (The Toronto Stock Exchange)1ST PFD SER SCACADMay 2014
      GWO.PRTTSX (The Toronto Stock Exchange)5.15 FST PFD TCACADMay 2017

      Biography

      Great-West Lifeco Inc., a financial services holding company, engages in life and health insurance, asset management, investment and retirement savings, and reinsurance businesses in Canada, the United States, and Europe. The company offers a portfolio of financial and benefit plan solutions for individuals, families, businesses, and organizations; life, disability, critical illness, accidental death, dismemberment, dental protection, direct marketing, health, and creditor insurance products; and wealth savings and income, accumulation, and annuity products. It also provides employer-sponsored retirement savings plans, individual retirement accounts, enrollment services, communication materials, investment options, and education services; and fund management, investment, and advisory services. In addition, the company offers private-label recordkeeping and administrative services; executive benefits products; and investment products, including equity, fixed income, absolute return, and alternative strategies. Further, it provides protection and wealth management products; payout annuity, and property and casualty reinsurance and retrocession products; and pension products. The company offers its products under the under various brand names, including the Great-West Life, London Life, the Canada Life, the Freedom 55 Financial, the Irish Life, the Great-West Financial, the Empower Retirement, the Putnam Investments, and PanAgora. It distributes its products through a network of advisors, dealers, brokers, managing general agencies, financial institutions, consultants, third-party administrators, wholesale and retail sales force, financial planners, employee benefit consultants, banks, and multi-tied agents. The company was founded in 1891 and is based in Winnipeg, Canada. Great-West Lifeco Inc. is a subsidiary of Power Financial Corporation. 


      Company Analysis and Financial Data Status

      All financial data provided by Standard & Poor's Capital IQ.
      DataLast Updated (UTC time)
      Company Analysis2020/01/22 23:37
      End of Day Share Price2020/01/22 00:00
      Earnings2019/09/30
      Annual Earnings2018/12/31


      Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.