GREAT-WEST LIFECO INC. $32 - Toronto symbol GWO

GREAT-WEST LIFECO INC. $32 (Toronto symbol GWO; Conservative Growth Portfolio, Finance sector; Shares outstanding: 1.0 billion; Market cap: $32.0 billion; Price-to-sales ratio: 1.3; Dividend Yield: 3.8%; TSINetwork Rating: Above Average; www.greatwestlifeco.com) is one of Canada’s largest insurance companies, with $705.1 billion of assets under administration. It also sells mutual funds and retirement planning and wealth management services. Power Financial (Toronto symbol PFC) owns 68.1% of Great-West.

In July 2013, the company completed its $1.75- billion purchase of Irish Life Group, Ireland’s largest pension manager and life insurance provider.

If you exclude costs to integrate Irish Life, Great-West would have earned $583 million in the three months ended September 30, 2013. That includes $41 million from Irish Life. This new business should contribute $215 million to Great- West’s annual earnings by the end of 2014.

The latest earnings are also up 12.5% from $518 million a year earlier. Due to more shares outstanding, earnings per share rose 7.3%, to $0.59 from $0.55.

Revenue fell 19.9%, to $6.9 billion from $8.6 billion, mainly on fewer gains from the firm’s investment portfolio.

The stock trades at 14.0 times the $2.29 a share that Great- West will likely earn in 2013. The $1.23 dividend yields 3.8%.

Great-West is a buy.

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