Analyzing Globe Life (NYSE:GL) and Fairfax Financial (OTCMKTS:FRFHF)

Globe Life (NYSE:GL) and Fairfax Financial (OTCMKTS:FRFHF) are both large-cap finance companies, but which is the better investment? We will contrast the two companies based on the strength of their analyst recommendations, institutional ownership, dividends, risk, profitability, valuation and earnings.

Earnings & Valuation

This table compares Globe Life and Fairfax Financial”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Globe Life	$5.99 billion	2.19	$1.16 billion	$15.06	11.36
Fairfax Financial	$31.59 billion	1.08	$4.77 billion	$204.10	8.00

Fairfax Financial has higher revenue and earnings than Globe Life. Fairfax Financial is trading at a lower price-to-earnings ratio than Globe Life, indicating that it is currently the more affordable of the two stocks.

Institutional & Insider Ownership

81.6% of Globe Life shares are owned by institutional investors. Comparatively, 10.4% of Fairfax Financial shares are owned by institutional investors. 2.1% of Globe Life shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Analyst Recommendations

This is a breakdown of current ratings and target prices for Globe Life and Fairfax Financial, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Globe Life	0	2	8	1	2.91
Fairfax Financial	0	3	3	0	2.50

Globe Life currently has a consensus target price of $191.67, indicating a potential upside of 12.04%. Given Globe Life’s stronger consensus rating and higher possible upside, research analysts plainly believe Globe Life is more favorable than Fairfax Financial.

Risk and Volatility

Globe Life has a beta of 0.48, indicating that its stock price is 52% less volatile than the S&P 500. Comparatively, Fairfax Financial has a beta of 0.49, indicating that its stock price is 51% less volatile than the S&P 500.

Dividends

Globe Life pays an annual dividend of $1.32 per share and has a dividend yield of 0.8%. Fairfax Financial pays an annual dividend of $15.00 per share and has a dividend yield of 0.9%. Globe Life pays out 8.8% of its earnings in the form of a dividend. Fairfax Financial pays out 7.3% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Globe Life has raised its dividend for 20 consecutive years. Fairfax Financial is clearly the better dividend stock, given its higher yield and lower payout ratio.

Profitability

This table compares Globe Life and Fairfax Financial’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Globe Life	19.58%	20.52%	3.96%
Fairfax Financial	13.83%	14.72%	4.16%

Summary

Globe Life beats Fairfax Financial on 11 of the 18 factors compared between the two stocks.

About Globe Life

Globe Life Inc., through its subsidiaries, provides various life and supplemental health insurance products, and annuities to lower middle- and middle-income families in the United States. The company operates in four segments: Life Insurance, Supplemental Health Insurance, Annuities, and Investments. It offers whole, term, and other life insurance products; Medicare supplement and supplemental health insurance products, such as accident, cancer, critical illness, heart, and intensive care plans; and single-premium and flexible-premium deferred annuities. The company sells its products through its direct to consumer division, exclusive agencies, and independent agents. The company was formerly known as Torchmark Corporation and changed its name to Globe Life Inc. in August 2019. Globe Life Inc. was founded in 1900 and is headquartered in McKinney, Texas.

About Fairfax Financial

Fairfax Financial Holdings Limited, through its subsidiaries, provides property and casualty insurance and reinsurance, and investment management services in the United States, Canada, Asia, and internationally. The company operates through Property and Casualty Insurance and Reinsurance, Life insurance and Run-off, and Non-Insurance Companies segments. It insures against losses to property from fire, explosion, earthquake, windstorm, flood, terrorism, boiler explosion, machinery breakdown, and construction defects, as well as underwrites automobile, commercial and personal property, and crop insurance. The company also offers workers' compensation, automobile, employer's liability, accident and health, medical malpractice, professional liability, and umbrella coverage insurance products; marine, aerospace, surety risk, and other risks and liabilities insurance products; and reinsurance products. In addition, it franchises, owns, and operates restaurants; retails sports lifestyle products; provides integrated travel and travel-related financial services, as well as advanced digital tools for agriculture; owns and operates holiday resorts; originates, processes, and distributes value-added pulses and staple foods; develops, manages, and invests in hospitality real estate. The company was formerly known as Markel Financial Holdings Limited and changed its name to Fairfax Financial Holdings Limited in 1987. Fairfax Financial Holdings Limited was incorporated in 1951 and is headquartered in Toronto, Canada.