GREAT-WEST LIFECO INC. $35 - Toronto symbol GWO

GREAT-WEST LIFECO INC. $35 (Toronto symbol GWO; Conservative Growth and Income Portfolios, Finance sector; Shares outstanding: 993.2 million; Market cap: $34.8 billion; Price-to-sales ratio: 1.0; Dividend Yield: 3.7%; TSINetwork Rating: Above Average; www.greatwestlifeco.com) is Canada’s second-largest insurance company, after Manulife Financial (Toronto symbol MFC). It also offers mutual funds, retirement planning and wealth management. Power Financial (Toronto symbol PWF) owns 67.2% of Great-West. As of September 30, 2015, the company had $1.15 trillion of assets under administration, up 12.9% from a year earlier. Great-West gets 45% of its earnings from Canada, where it operates under well-known labels like Great-West Life, Canada Life and Freedom 55. The company’s European division (41% of earnings) mainly sells group insurance and annuity products in the U.K., Ireland and Germany. In the U.S. (14% of earnings), Great-West is a leading provider of employer-sponsored retirement savings plans. This division also owns Putnam Investments, a major mutual fund firm. The company continues to benefit from two recent acquisitions. In July 2013, it paid $1.75 billion for Irish Life, Ireland’s largest pension manager and life insurance provider. This year, it paid an undisclosed sum for the Irish operations of Legal & General Group plc, which provides investment and tax-planning services to wealthy individuals. In the three months ended September 30, 2015, Great-West’s earnings rose 4.8%, to $720 million, or $0.72 a share, from $687 million, or $0.69, a year earlier. Higher earnings from Europe offset declines in Canada and the U.S. Revenue rose 1.7%, to $8.60 billion from $8.45 billion. The company will probably earn $2.79 a share in 2015, and the stock trades at a low 12.5 times that estimate. The $1.30 dividend yields 3.7%. Great-West Lifeco is a buy.

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