Reviewing Fairfax Financial (OTCMKTS:FRFHF) & Globe Life (NYSE:GL)

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

Analyst Ratings

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

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

Globe Life has a consensus target price of $191.67, suggesting a potential upside of 10.53%. Given Globe Life’s stronger consensus rating and higher probable upside, analysts clearly believe Globe Life is more favorable than Fairfax Financial.

Earnings and Valuation

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Fairfax Financial	$31.59 billion	1.08	$4.77 billion	$204.10	8.03
Globe Life	$5.99 billion	2.22	$1.16 billion	$15.06	11.51

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.

Risk & Volatility

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

Dividends

Fairfax Financial pays an annual dividend of $15.00 per share and has a dividend yield of 0.9%. Globe Life pays an annual dividend of $1.32 per share and has a dividend yield of 0.8%. Fairfax Financial pays out 7.3% of its earnings in the form of a dividend. Globe Life pays out 8.8% 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.

Insider & Institutional Ownership

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

Profitability

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

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

Summary

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

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.

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.