Long-established in the Insurance industry, Vericity Inc (VERY, Financial) has enjoyed a stellar reputation. However, it has recently witnessed a decline of 9.91%, juxtaposed with a three-month change of -20.32%. Fresh insights from the GuruFocus Score Rating hint at potential headwinds. Notably, its diminished rankings in financial strength, growth, and valuation suggest that the company might not live up to its historical performance. Join us as we dive deep into these pivotal metrics to unravel the evolving narrative of Vericity Inc.
Decoding the GF Score
The GF Score is a stock performance ranking system developed by GuruFocus using five aspects of valuation, which has been found to be closely correlated to the long-term performances of stocks by backtesting from 2006 to 2021. The stocks with a higher GF Score generally generate higher returns than those with a lower GF Score. Therefore, when picking stocks, investors should invest in companies with high GF Scores. The GF Score ranges from 0 to 100, with 100 as the highest rank.
- 1. Financial strength rank: 3/10
- 2. Profitability rank: 3/10
- 3. Growth rank: 4/10
- 4. GF Value rank: 10/10
- 5. Momentum rank: 9/10
Based on the above method, GuruFocus assigned Vericity Inc the GF Score of 68 out of 100, which signals poor future outperformance potential.
Understanding Vericity Inc's Business
Vericity Inc, along with its subsidiaries, offers life insurance products to the middle American market. It operates through three segments namely Agency, Insurance, and Corporate. The Agency segment includes the insurance distribution operations of the company and includes commission revenue from the sale of Fidelity Life products. The Insurance segment, which is the key revenue generating segment, is composed of three broad lines consisting of Direct Life, Closed Block, and Assumed Life and Annuities. The company has a market cap of $74.38 million and sales of $170.98 million.
Financial Strength Breakdown
Vericity Inc's financial strength indicators present some concerning insights about the company's balance sheet health. Vericity Inc has an interest coverage ratio of 0, which positions it worse than 0% of 315 companies in the Insurance industry. This ratio highlights potential challenges the company might face when handling its interest expenses on outstanding debt. It's worth noting that the esteemed investor Benjamin Graham typically favored companies with an interest coverage ratio of at least five.
Additionally, the company's low cash-to-debt ratio at 0.15 indicates a struggle in handling existing debt levels.
Profitability Breakdown
Vericity Inc's low Profitability rank can also raise warning signals. Vericity Inc's Net Margin has declined over the past five years (-13,136.00%), as shown by the following data: 2018: -11.17; 2019: -14.28; 2020: -16.93; 2021: -9.43; 2022: -12.48; .
Growth Prospects
A lack of significant growth is another area where Vericity Inc seems to falter, as evidenced by the company's low Growth rank.
Conclusion
Given Vericity Inc's financial strength, profitability, and growth metrics, the GuruFocus Score Rating highlights the firm's unparalleled position for potential underperformance. While the company has a rich history in the insurance industry, its current financial indicators suggest a rocky road ahead. Investors should consider these factors when making investment decisions.
GuruFocus Premium members can find more companies with strong GF Scores using the following screener link: GF Score Screen
