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Primerica reported middle-income purchasing power rises, optimism split

EditorNatashya Angelica
Published 31/01/2024, 05:26
© Reuters.
PRI
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DULUTH, Ga. - Primerica, Inc. (NYSE: NYSE:PRI) has reported that the purchasing power of middle-income American households has reached its highest point since February 2022. According to Primerica's Household Budget Index (HBI), the index for December 2023 stood at 102.5%, an increase from 100.5% in November and significantly up from 96.5% in the previous year.

The uptick in the HBI, which measures the purchasing power of families earning between $30,000 to $130,000, is attributed to a substantial decrease in gas prices by 5.8% and modest rises in the cost of other necessities such as food and healthcare, which saw increases of 0.1% and 0.4% respectively.

Despite the Consumer Price Index (CPI) rising by 3.3% in December, the cost of essential goods for middle-income families only increased by 1%. Primerica's CEO, Glenn J. Williams, noted that the combination of declining costs for essentials like gas and heating fuel, along with real income gains adjusted for inflation, has begun to provide families with more financial leeway.

The company's Financial Security Monitor (FSM) survey, conducted alongside the HBI, reveals a divide in sentiment among middle-income Americans regarding their personal financial situations. As of December 2023, exactly half of the respondents view their personal financial situation positively, a stabilization from previous negative trends.

The FSM survey also highlights concerns among middle-income Americans about the broader economy, with 60% feeling pessimistic about the economic outlook over the next year. However, there is a slight increase in optimism compared to December 2022, with 24% of respondents feeling optimistic heading into 2024.

Furthermore, the survey indicates a strong focus on debt reduction, with 40% of middle-income Americans prioritizing paying off consumer and credit card debt and 39% aiming to manage their debt load in 2024.

These findings are based on a survey conducted online from December 5-12, 2023, polling 1,150 adults across the United States with incomes in the specified range. The margin of error for the survey is 3.3%.

Primerica's economic consultant Amy Crews Cutts, Ph.D., CBE®, who oversees the development of the HBI, emphasizes that while improvements in financial well-being are evident, it may take time before middle-income households feel significantly better off. The survey results and index data are part of Primerica's ongoing efforts to provide insights into the financial health of middle-income Americans. This analysis is based on a press release statement from Primerica, Inc.

InvestingPro Insights

As Primerica, Inc. (NYSE: PRI) sheds light on the improving financial health of middle-income Americans, investors may find it valuable to consider the company's own financial standing and market performance. According to InvestingPro, Primerica has demonstrated resilience and growth that could be of interest to shareholders and potential investors. The company's market capitalization stands at a robust $8.17 billion, reflecting investor confidence. A notable InvestingPro Tip is that Primerica has a history of rewarding its shareholders, having raised its dividend for 14 consecutive years, which speaks to its commitment to returning value to investors.

Furthermore, the company's P/E ratio is currently at 18.01, with an adjusted P/E ratio for the last twelve months as of Q3 2023 at 17.44, indicating a potentially attractive valuation relative to near-term earnings growth. This is supported by a PEG ratio of 0.44 for the same period, suggesting that the stock may be undervalued based on its earnings trajectory. Moreover, Primerica's revenue growth for Q3 2023 was 5.46% quarterly, which, alongside a gross profit margin of 60.55%, underscores its financial robustness.

Investors looking for additional insights will find a wealth of InvestingPro Tips on Primerica, which include observations such as the company's liquid assets exceeding short-term obligations and its trading near a 52-week high. For those considering investing in Primerica, the InvestingPro platform offers a comprehensive list of tips to guide investment decisions. Currently, InvestingPro lists an additional 12 tips for Primerica, available to subscribers.

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This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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