AMERICAN FINANCIAL GROUP INC (AFG) Stock Fundamental Analysis
NYSE:AFG - New York Stock Exchange, Inc. - US0259321042 - Common Stock - Currency: USD
Taking everything into account, AFG scores 5 out of 10 in our fundamental rating. AFG was compared to 145 industry peers in the Insurance industry. AFG has only an average score on both its financial health and profitability. AFG is not valued too expensively and it also shows a decent growth rate.
1. Profitability
1.1 Basic Checks
AFG had positive earnings in the past year.
In the past year AFG had a positive cash flow from operations.
AFG had positive earnings in each of the past 5 years.
Each year in the past 5 years AFG had a positive operating cash flow.
1.2 Ratios
AFG has a Return On Assets (2.64%) which is in line with its industry peers.
AFG has a Return On Equity of 18.19%. This is amongst the best in the industry. AFG outperforms 82.76% of its industry peers.
AFG has a Return On Invested Capital (2.66%) which is in line with its industry peers.
AFG had an Average Return On Invested Capital over the past 3 years of 2.95%. This is in line with the industry average of 4.07%.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 2.64% | ||
| ROE | 18.19% | ||
| ROIC | 2.66% |
ROA(3y)2.95%
ROA(5y)3.35%
ROE(3y)20.68%
ROE(5y)22.52%
ROIC(3y)2.95%
ROIC(5y)2.64%
1.3 Margins
With a decent Profit Margin value of 9.71%, AFG is doing good in the industry, outperforming 65.52% of the companies in the same industry.
AFG's Profit Margin has been stable in the last couple of years.
AFG has a Operating Margin (12.29%) which is comparable to the rest of the industry.
In the last couple of years the Operating Margin of AFG has declined.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 12.29% | ||
| PM (TTM) | 9.71% | ||
| GM | N/A |
OM growth 3Y-15.95%
OM growth 5Y-2.25%
PM growth 3Y-29.55%
PM growth 5Y-0.39%
GM growth 3YN/A
GM growth 5YN/A
2. Health
2.1 Basic Checks
With a Return on Invested Capital (ROIC) below the Cost of Capital (WACC), AFG is destroying value.
Compared to 1 year ago, AFG has more shares outstanding
The number of shares outstanding for AFG has been reduced compared to 5 years ago.
Compared to 1 year ago, AFG has an improved debt to assets ratio.
2.2 Solvency
Based on the Altman-Z score of 0.80, we must say that AFG is in the distress zone and has some risk of bankruptcy.
AFG has a better Altman-Z score (0.80) than 79.31% of its industry peers.
The Debt to FCF ratio of AFG is 1.16, which is an excellent value as it means it would take AFG, only 1.16 years of fcf income to pay off all of its debts.
With a Debt to FCF ratio value of 1.16, AFG perfoms like the industry average, outperforming 56.55% of the companies in the same industry.
AFG has a Debt/Equity ratio of 0.34. This is a healthy value indicating a solid balance between debt and equity.
AFG has a Debt to Equity ratio (0.34) which is in line with its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.34 | ||
| Debt/FCF | 1.16 | ||
| Altman-Z | 0.8 |
ROIC/WACC0.31
WACC8.46%
2.3 Liquidity
A Current Ratio of 3.75 indicates that AFG has no problem at all paying its short term obligations.
AFG's Current ratio of 3.75 is amongst the best of the industry. AFG outperforms 95.86% of its industry peers.
AFG has a Quick Ratio of 3.75. This indicates that AFG is financially healthy and has no problem in meeting its short term obligations.
Looking at the Quick ratio, with a value of 3.75, AFG belongs to the top of the industry, outperforming 95.86% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 3.75 | ||
| Quick Ratio | 3.75 |
3. Growth
3.1 Past
AFG shows a slight negative growth in Earnings Per Share. In the last year, the EPS has decreased by -6.04%.
The Earnings Per Share has been growing slightly by 4.54% on average over the past years.
AFG shows a small growth in Revenue. In the last year, the Revenue has grown by 2.87%.
AFG shows a small growth in Revenue. Measured over the last years, the Revenue has been growing by 0.16% yearly.
EPS 1Y (TTM)-6.04%
EPS 3Y-2.5%
EPS 5Y4.54%
EPS Q2Q%-34.42%
Revenue 1Y (TTM)2.87%
Revenue growth 3Y8.33%
Revenue growth 5Y0.16%
Sales Q2Q%2.2%
3.2 Future
Based on estimates for the next years, AFG will show a small growth in Earnings Per Share. The EPS will grow by 4.22% on average per year.
AFG is expected to show a small growth in Revenue. In the coming years, the Revenue will grow by 2.54% yearly.
EPS Next Y-5.58%
EPS Next 2Y5.27%
EPS Next 3Y4.22%
EPS Next 5YN/A
Revenue Next Year0.44%
Revenue Next 2Y3.38%
Revenue Next 3Y2.54%
Revenue Next 5YN/A
3.3 Evolution
The EPS growth rate is stable: in the next years the growth will be about the same than in the last years.
When comparing the Revenue growth rate of the last years to the growth rate of the upcoming years, we see that the growth is accelerating.
4. Valuation
4.1 Price/Earnings Ratio
Based on the Price/Earnings ratio of 13.01, the valuation of AFG can be described as correct.
AFG's Price/Earnings is on the same level as the industry average.
Compared to an average S&P500 Price/Earnings ratio of 27.50, AFG is valued rather cheaply.
With a Price/Forward Earnings ratio of 10.70, the valuation of AFG can be described as very reasonable.
Compared to the rest of the industry, the Price/Forward Earnings ratio of AFG is on the same level as its industry peers.
AFG's Price/Forward Earnings ratio indicates a rather cheap valuation when compared to the S&P500 average which is at 36.44.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 13.01 | ||
| Fwd PE | 10.7 |
4.2 Price Multiples
Compared to the rest of the industry, the Enterprise Value to EBITDA ratio of AFG is on the same level as its industry peers.
AFG's Price/Free Cash Flow ratio is in line with the industry average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 8.4 | ||
| EV/EBITDA | 9.9 |
4.3 Compensation for Growth
PEG (NY)N/A
PEG (5Y)2.87
EPS Next 2Y5.27%
EPS Next 3Y4.22%
5. Dividend
5.1 Amount
AFG has a Yearly Dividend Yield of 2.51%.
AFG's Dividend Yield is rather good when compared to the industry average which is at 3.76. AFG pays more dividend than 89.66% of the companies in the same industry.
Compared to an average S&P500 Dividend Yield of 2.35, AFG has a dividend comparable with the average S&P500 company.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.51% |
5.2 History
On average, the dividend of AFG grows each year by 13.64%, which is quite nice.
AFG has been paying a dividend for at least 10 years, so it has a reliable track record.
AFG has decreased its dividend recently.
Dividend Growth(5Y)13.64%
Div Incr Years1
Div Non Decr Years1
5.3 Sustainability
94.24% of the earnings are spent on dividend by AFG. This is not a sustainable payout ratio.
AFG's earnings are growing slower than its dividend. This means the dividend growth is not sustainable.
DP94.24%
EPS Next 2Y5.27%
EPS Next 3Y4.22%
127.46
+0.12 (+0.09%)
Chartmill FA Rating
GICS SectorFinancials
GICS IndustryGroupInsurance
GICS IndustryInsurance
Earnings (Last)
Earnings (Next)
Inst Owners66.31%
Inst Owner Change0%
Ins Owners17.94%
Ins Owner Change2.83%
Market Cap10.65B
Analysts70.91
Price Target134.44 (5.48%)
Short Float %2.35%
Short Ratio3.15
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.51% |
Yearly Dividend9.4
Dividend Growth(5Y)13.64%
DP94.24%
Div Incr Years1
Div Non Decr Years1
Ex-Date
Surprises & Revisions
EPS beat(2)0
Avg EPS beat(2)-6.01%
Min EPS beat(2)-11.61%
Max EPS beat(2)-0.4%
EPS beat(4)1
Avg EPS beat(4)-3.94%
Min EPS beat(4)-11.61%
Max EPS beat(4)3.61%
EPS beat(8)2
Avg EPS beat(8)-4.36%
EPS beat(12)5
Avg EPS beat(12)-0.06%
EPS beat(16)9
Avg EPS beat(16)9.47%
Revenue beat(2)1
Avg Revenue beat(2)-1.8%
Min Revenue beat(2)-10.18%
Max Revenue beat(2)6.57%
Revenue beat(4)2
Avg Revenue beat(4)0.02%
Min Revenue beat(4)-10.18%
Max Revenue beat(4)11.93%
Revenue beat(8)4
Avg Revenue beat(8)-0.4%
Revenue beat(12)7
Avg Revenue beat(12)3.8%
Revenue beat(16)11
Avg Revenue beat(16)7.9%
PT rev (1m)0%
PT rev (3m)-3.08%
EPS NQ rev (1m)-2.03%
EPS NQ rev (3m)-12.93%
EPS NY rev (1m)-3.01%
EPS NY rev (3m)-3.87%
Revenue NQ rev (1m)0%
Revenue NQ rev (3m)-2.78%
Revenue NY rev (1m)0%
Revenue NY rev (3m)-6.57%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 13.01 | ||
| Fwd PE | 10.7 | ||
| P/S | 1.29 | ||
| P/FCF | 8.4 | ||
| P/OCF | 7.68 | ||
| P/B | 2.42 | ||
| P/tB | 2.74 | ||
| EV/EBITDA | 9.9 |
EPS(TTM)9.8
EY7.69%
EPS(NY)11.91
Fwd EY9.35%
FCF(TTM)15.17
FCFY11.9%
OCF(TTM)16.61
OCFY13.03%
SpS98.55
BVpS52.59
TBVpS46.56
PEG (NY)N/A
PEG (5Y)2.87
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 2.64% | ||
| ROE | 18.19% | ||
| ROCE | 3.37% | ||
| ROIC | 2.66% | ||
| ROICexc | 2.78% | ||
| ROICexgc | 3.05% | ||
| OM | 12.29% | ||
| PM (TTM) | 9.71% | ||
| GM | N/A | ||
| FCFM | 15.39% |
ROA(3y)2.95%
ROA(5y)3.35%
ROE(3y)20.68%
ROE(5y)22.52%
ROIC(3y)2.95%
ROIC(5y)2.64%
ROICexc(3y)3.07%
ROICexc(5y)2.78%
ROICexgc(3y)3.35%
ROICexgc(5y)3.01%
ROCE(3y)3.73%
ROCE(5y)3.34%
ROICexcg growth 3Y-11.18%
ROICexcg growth 5Y16.37%
ROICexc growth 3Y-11.66%
ROICexc growth 5Y15.82%
OM growth 3Y-15.95%
OM growth 5Y-2.25%
PM growth 3Y-29.55%
PM growth 5Y-0.39%
GM growth 3YN/A
GM growth 5YN/A
F-Score6
Asset Turnover0.27
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.34 | ||
| Debt/FCF | 1.16 | ||
| Debt/EBITDA | 1.35 | ||
| Cap/Depr | 144.58% | ||
| Cap/Sales | 1.46% | ||
| Interest Coverage | 250 | ||
| Cash Conversion | 126.67% | ||
| Profit Quality | 158.57% | ||
| Current Ratio | 3.75 | ||
| Quick Ratio | 3.75 | ||
| Altman-Z | 0.8 |
F-Score6
WACC8.46%
ROIC/WACC0.31
Cap/Depr(3y)114.17%
Cap/Depr(5y)79.15%
Cap/Sales(3y)1.25%
Cap/Sales(5y)1.15%
Profit Quality(3y)152.16%
Profit Quality(5y)165.86%
High Growth Momentum
Growth
EPS 1Y (TTM)-6.04%
EPS 3Y-2.5%
EPS 5Y4.54%
EPS Q2Q%-34.42%
EPS Next Y-5.58%
EPS Next 2Y5.27%
EPS Next 3Y4.22%
EPS Next 5YN/A
Revenue 1Y (TTM)2.87%
Revenue growth 3Y8.33%
Revenue growth 5Y0.16%
Sales Q2Q%2.2%
Revenue Next Year0.44%
Revenue Next 2Y3.38%
Revenue Next 3Y2.54%
Revenue Next 5YN/A
EBIT growth 1Y-8.99%
EBIT growth 3Y-8.95%
EBIT growth 5Y-2.09%
EBIT Next YearN/A
EBIT Next 3YN/A
EBIT Next 5YN/A
FCF growth 1Y29.68%
FCF growth 3Y-14.88%
FCF growth 5Y-15.83%
OCF growth 1Y31.72%
OCF growth 3Y-12.4%
OCF growth 5Y-14.05%