GREAT-WEST LIFECO INC. $30 - Toronto symbol GWO

GREAT-WEST LIFECO INC. $30 (Toronto symbol GWO; Conservative Growth and Income Portfolios, Finance sector; Shares outstanding: 999.2 million; Market cap: $30.0 billion; Price-to-sales ratio: 1.2; Dividend Yield: 4.1%; TSINetwork Rating: Above Average; www.greatwestlifeco.com) is one of Canada’s largest insurance companies, with $758.3 billion of assets under administration. It also offers mutual funds, retirement planning and wealth management. Power Financial (Toronto symbol PFC) owns 67.0% of Great-West.

The company continues to benefit from its recent $1.75-billion purchase of Irish Life Group, Ireland’s largest pension manager and life insurance provider.

If you exclude integration costs, Great-West earned $2.05 billion in 2013, including $85 million of profits from Irish Life. The latest earnings are also up 5.4% from $1.95 billion in 2012. Due to more shares outstanding, earnings per share rose 2.9%, to $2.11 from $2.05.

Revenue fell 13.6%, to $26.4 billion from $30.6 billion, mainly on fewer gains from the firm’s investment portfolio.

Owning Irish Life for a full year should push up Great- West’s earnings to $2.47 a share in 2014. The stock trades at just 12.1 times that estimate. The $1.23 dividend yields 4.1%.

Great-West is a buy.

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