Great-West Lifeco (GWO) AI Stock Analysis

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Great-West Lifeco

(TSX:GWO)

68Neutral

Great-West Lifeco shows strong profitability and balance sheet stability, with challenges in revenue growth. The stock's technical indicators show mixed signals, but valuation metrics are favorable with a solid dividend yield. The recent earnings call emphasizes record performance and strategic initiatives, providing a positive outlook. These factors collectively result in a moderately positive overall stock score.

Positive Factors

Dividend

A 10% dividend increase surpasses the previous estimate of 8%.

Return on Equity

The company has increased its medium-term base ROE target to over 19%, reflecting a strong focus on generating higher returns.

Negative Factors

Earnings Visibility

The generally full valuation at 11.8x NTM base EPS and earnings visibility challenges in the Europe/Capital & Risk Solutions segments create concerns.

Insurance and Empower Earnings

Weaker expected insurance earnings and Empower earnings impact the company's performance.

Great-West Lifeco (GWO) vs. S&P 500 (SPY)

Market Cap

C$48.27B

Dividend Yield4.39%

Average Volume (3M)2.23M

Price to Earnings (P/E)12.4

Beta (1Y)0.56

Revenue Growth-2.40%

EPS Growth42.24%

CountryCA

Employees33,250

SectorFinancial

Sector Strength88

IndustryInsurance - Life

Share Statistics

EPS (TTM)4.18

Shares Outstanding930,708,100

10 Day Avg. Volume1,968,291

30 Day Avg. Volume2,226,159

Financial Highlights & Ratios

PEG Ratio0.29

Price to Book (P/B)N/A

Price to Sales (P/S)0.00

Price to Cash Flow (P/CF)0.00

P/FCF Ratio0.00

Enterprise Value/Market CapN/A

Enterprise Value/RevenueN/A

Enterprise Value/Gross ProfitN/A

Enterprise Value/EbitdaN/A

Forecast

1Y Price Target

C$55.67

Price Target Upside7.35% Upside

Rating ConsensusModerate Buy

Number of Analyst Covering9

Great-West Lifeco Business Overview & Revenue Model

Company DescriptionGreat-West Lifeco Inc. is a Canadian financial services holding company with operations primarily in North America, Europe, and Asia. It operates in the life insurance, health insurance, investment, and retirement savings sectors. The company offers a wide range of products and services through its various subsidiaries, including individual and group life insurance, health benefits, retirement and investment services, reinsurance, and asset management. Great-West Lifeco is part of the Power Financial Corporation group of companies and serves millions of customers globally.

How the Company Makes MoneyGreat-West Lifeco generates revenue through multiple streams, primarily from premiums collected on life and health insurance policies, as well as fees from investment management and retirement services. The company earns money from underwriting insurance policies, where it charges premiums to its policyholders and invests the premiums in a variety of assets to generate returns. Additionally, Great-West Lifeco earns management fees from its asset management services, which include mutual funds and other investment products. The company also benefits from strategic partnerships and acquisitions, which expand its market reach and diversify its product offerings. Interest income from its invested assets and reinsurance agreements further contribute to its earnings.

Great-West Lifeco Financial Statement Overview

Summary

Great-West Lifeco's financials show strengths in profitability margins and balance sheet stability, with a solid equity ratio and reasonable leverage. However, revenue decline poses a challenge, and the company's ability to generate operating cash flow slightly weakened. Overall, the company maintains a stable financial position but should address revenue growth to enhance future performance.

Income Statement

Neutral

Great-West Lifeco has experienced a decline in revenue from previous years, with a substantial drop from 2021 to 2022 and further decline in 2023. The gross profit margin remains high since revenue equals gross profit, typical for insurance companies. The net profit margin has shown improvement in 2023 compared to 2022 and 2021, indicating better cost management. However, the absence of EBIT data in 2024 raises concerns about operating efficiency.

Balance Sheet

Positive

The company's debt-to-equity ratio is reasonable, indicating a balanced leverage. The equity ratio suggests a strong equity base compared to total assets, which is positive for long-term stability. Return on equity has been stable but could improve. The overall balance sheet reflects a solid financial position, with a slight concern over increasing liabilities.

Cash Flow

Positive

Operating cash flow has been generally strong, but it decreased slightly in 2024. The free cash flow has shown resilience despite revenue declines, and the free cash flow to net income ratio indicates efficient cash generation relative to profits. The cash flow stability is promising, yet the drop in operating cash flow warrants attention.

Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Breakdown
Income Statement		Total Revenue
17.22B	25.27B	44.70B	64.45B	60.60B
	Gross Profit
17.22B	25.27B	44.70B	64.45B	60.60B
	EBIT
0.00	16.00M	3.97B	3.57B	2.99B
	EBITDA
5.93B	4.00B	3.72B	4.74B	3.82B
	Net Income Common Stockholders
4.07B	2.87B	3.73B	3.26B	3.08B
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
24.71B	19.38B	18.84B	17.23B	7.95B
	Total Assets
802.16B	713.23B	701.46B	630.49B	600.49B
	Total Debt
10.23B	9.65B	11.29B	9.73B	10.71B
	Net Debt
664.00M	2.60B	4.88B	4.96B	2.76B
	Total Liabilities
769.51B	683.38B	669.14B	600.00B	573.48B
	Stockholders Equity
29.54B	26.84B	29.01B	27.22B	24.03B
Cash Flow		Free Cash Flow
4.75B	5.20B	7.05B	10.37B	9.61B
	Operating Cash Flow
4.75B	5.20B	7.05B	10.37B	9.61B
	Investing Cash Flow
-408.00M	-786.00M	-5.49B	-11.21B	-8.20B
	Financing Cash Flow
-2.29B	-3.55B	-620.00M	-992.00M	2.01B

Great-West Lifeco Technical Analysis

Technical Analysis Sentiment

Neutral

Last Price51.86

Price Trends

50DMA

53.11

Negative

100DMA

50.18

Positive

200DMA

47.32

Positive

Market Momentum

MACD

-0.16

Positive

RSI

42.78

Neutral

STOCH

51.17

Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TSE:GWO, the sentiment is Neutral. The current price of 51.86 is below the 20-day moving average (MA) of 52.72, below the 50-day MA of 53.11, and above the 200-day MA of 47.32, indicating a neutral trend. The MACD of -0.16 indicates Positive momentum. The RSI at 42.78 is Neutral, neither overbought nor oversold. The STOCH value of 51.17 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for TSE:GWO.

Great-West Lifeco Peers Comparison

Overall Rating

UnderperformOutperform

Sector (64)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
FFH	76 Outperform	$53.19B	9.24	16.48%	0.97%	13.82%	-6.68%
MFC	75 Outperform	$75.08B	15.28	11.03%	3.73%	7.64%	9.22%
IAG	74 Outperform	C$12.75B	13.96	13.26%	2.51%	-17.69%	29.19%
POW	72 Outperform	C$32.88B	12.33	12.45%	4.48%	-7.62%	25.47%
SLF	70 Outperform	$47.52B	15.75	12.87%	3.95%	-12.72%	-0.16%
GWO	68 Neutral	C$48.27B	12.41	15.52%	4.39%	-2.40%	42.24%
Sector *	64 Neutral	$12.64B	9.74	8.05%	17044.60%	12.66%	-4.62%

* Financial Sector Average

Performance Comparison

TSE:GWO

Great-West Lifeco

51.86

10.58

25.63%

TSE:SLF

Sun Life Financial

82.95

13.38

19.23%

TSE:MFC

Manulife Financial

43.57

11.52

35.92%

TSE:FFH

Fairfax Financial Holdings

2,195.41

660.69

43.05%

TSE:IAG

iA Financial Corporation Inc

137.02

52.79

62.67%

TSE:POW

Power Corp of Canada

51.35

14.74

40.26%

Great-West Lifeco Earnings Call Summary

Earnings Call Date:Feb 05, 2025

(Q4-2024)

% Change Since: 10.51%|

Next Earnings Date:May 07, 2025

Earnings Call Sentiment Positive

The earnings call presented a strong performance across most segments, particularly with record earnings and growth in Empower and European markets. However, challenges remain with net outflows in Empower Workplace and impacts from California wildfires. The company's strong capital position and strategic initiatives such as the dividend increase and share repurchase highlight its resilience and potential for continued growth.

Q4-2024 Updates

Positive Updates

Record Performance Across Segments

Great-West Lifeco delivered record base earnings for the sixth consecutive quarter, with a year-over-year increase of 15% to $1.1 billion. Base EPS also increased by 15% to $1.20.

Empower Segment Growth

Empower in the U.S. reported a record quarter with base earnings growth of 36% and base ROE increasing by over 400 basis points in the past 12 months.

Dividend Increase and Share Repurchase

The Board approved a 10% dividend increase to $0.61 per common share and announced the intention to repurchase an additional $500 million worth of shares under the existing NCIB.

Strong Capital Position

LICAT ratio remained strong at 130%, and the leverage ratio decreased by 2 points year-over-year to 29%.

Growth in Personal Wealth

Empower Personal Wealth reported a 30% increase in average AUA compared to last year, with net flows accounting for 12% asset growth, demonstrating strong platform strength.

European Market Success

European businesses delivered record performance with average AUA growth of 23% year-over-year and strong net flows in the wealth and retirement segments.

Negative Updates

Net Outflows in Empower Workplace

Continued net outflows in Empower Workplace as planned members withdrew higher account balances, a trend consistent across the industry.

Wildfires in California

The Capital and Risk Solutions business anticipates modest impacts from recent wildfires in California, with current loss estimates between $10 million and $50 million after tax.

Moderation in Insurance Experience

Insurance service results were down year-over-year, reflecting a moderation in favorable experience from last year’s elevated levels.

Company Guidance

During the Great-West Lifeco Fourth Quarter 2024 Results Conference Call, the company reported record base earnings of $1.1 billion and base EPS of $1.20, both reflecting a 15% increase over the prior year. Base ROE rose to 17.5%, nearly a full percentage point higher than the previous year, while the book value per share saw a 12% increase. The U.S. segment, Empower, was highlighted for its exceptional performance, with base earnings growing by 36% and base ROE improving by over 400 basis points. The company's capital position remains strong with a LICAT ratio of 130%, despite a 4-point decrease from the previous quarter. Additionally, they announced a 10% increase in the quarterly dividend to $0.61 per share and a planned $500 million share repurchase under the existing NCIB. The company also noted favorable contributions from equity markets, foreign currency impacts, and strategic acquisitions, which have bolstered its financial results.

Great-West Lifeco Corporate Events

Executive/Board Changes

Great-West Lifeco Announces Leadership Transition

Neutral

May 1, 2025

Great-West Lifeco announced the retirement of Paul Mahon as President and CEO, effective July 1, 2025, with David Harney set to succeed him. Mahon, who has been instrumental in repositioning the company and leading it through significant transformations, will remain as a Senior Advisor until early 2026 to ensure a smooth transition. Harney, with over 35 years at the company and a proven track record in leadership roles, is expected to continue driving Lifeco’s growth strategy and strengthening its market presence.

Spark’s Take on TSE:GWO Stock

According to Spark, TipRanks’ AI Analyst, TSE:GWO is a Neutral.

Great-West Lifeco shows strong profitability and balance sheet stability, with challenges in revenue growth. The stock’s technical indicators show mixed signals, but valuation metrics are favorable with a solid dividend yield. The recent earnings call emphasizes record performance and strategic initiatives, providing a positive outlook. These factors collectively result in a moderately positive overall stock score.

To see Spark’s full report on TSE:GWO stock, click here.

Shareholder MeetingsFinancial Disclosures

Great-West Lifeco to Announce Q1 2025 Results and Hold Annual Meetings

Neutral

Apr 29, 2025

Great-West Lifeco announced it will release its first quarter 2025 financial results on May 7, with a subsequent earnings conference call and webcast scheduled for May 8. The company will also hold its Annual and Special Meetings on May 8, allowing registered shareholders and policyholders to participate in person or virtually. These events are significant as they provide stakeholders with insights into the company’s financial performance and strategic direction.

Spark’s Take on TSE:GWO Stock

According to Spark, TipRanks’ AI Analyst, TSE:GWO is a Neutral.

To see Spark’s full report on TSE:GWO stock, click here.

Business Operations and StrategyFinancial Disclosures

Great-West Lifeco Updates Financial Objectives at 2025 Investor Day

Positive

Apr 2, 2025

Great-West Lifeco Inc. hosted its 2025 Investor Day in Toronto, focusing on the theme ‘Driving Growth, Delivering Lasting Value.’ The company updated its medium-term financial objectives, including an increase in its Base Return on Equity objective to 19% or more, up from 16-17%. Additionally, it introduced a new objective for Base Capital Generation of 80% or more and reaffirmed its confidence in achieving Base EPS growth of 8-10% and a Base Dividend Payout Ratio of 45-55%. These updates reflect the company’s strategic focus on building market-leading franchises and delivering value for shareholders through strong cash and capital generation.

Business Operations and StrategyFinancial Disclosures

Great-West Lifeco Enhances Transparency with Updated 2025 Information Package

Positive

Mar 18, 2025

Great-West Lifeco has updated its Supplemental Information Package for 2025, offering more detailed segment reporting and enhanced disclosure of assets under management and advisement. These changes aim to provide greater clarity and transparency for analysts and investors, particularly in the Retirement and Wealth lines of business. The update also includes a new efficiency ratio metric and reclassification of certain expenses to improve understanding of expense management and capital allocation.

Business Operations and Strategy

Great-West Lifeco CEO to Present at RBC Conference

Neutral

Feb 25, 2025

Great-West Lifeco announced that its President and CEO, Paul Mahon, will present at the RBC Capital Markets Global Financial Institutions Conference on March 5, 2025. This engagement underscores the company’s active participation in industry discussions and could enhance its visibility and influence within the financial sector.

Stock BuybackDividendsFinancial Disclosures

Great-West Lifeco Reports Record Earnings and Increases Dividend

Positive

Feb 5, 2025

Great-West Lifeco Inc. reported record fourth quarter and full-year 2024 earnings, with base earnings reaching $1.1 billion for the quarter and $4.2 billion for the year, reflecting increases of 15% and 14% respectively compared to the previous year. The company also announced a 10% dividend increase and plans for additional share repurchases, highlighting its strategic focus on shareholder value and robust financial performance amid economic uncertainties.

Glossary

OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.

NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.

UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.