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FAIRFAX FINANCIAL HLDGS LTD (FFH.CA) Stock Fundamental Analysis

TSX:FFH - Toronto Stock Exchange - CA3039011026 - Common Stock - Currency: CAD

2070.19  +70.19 (+3.51%)

Fundamental Rating

4

Taking everything into account, FFH scores 4 out of 10 in our fundamental rating. FFH was compared to 83 industry peers in the Insurance industry. While FFH is still in line with the averages on profitability rating, there are concerns on its financial health. FFH has a valuation in line with the averages, but on the other hand it scores bad on growth.


Dividend Valuation Growth Profitability Health

6

1. Profitability

1.1 Basic Checks

FFH had positive earnings in the past year.
FFH had a positive operating cash flow in the past year.
FFH had positive earnings in 4 of the past 5 years.
In multiple years FFH reported negative operating cash flow during the last 5 years.
FFH.CA Yearly Net Income VS EBIT VS OCF VS FCFFFH.CA Yearly Net Income VS EBIT VS OCF VS FCFYearly Net Income VS EBIT VS OCF VS FCF 2015 2016 2017 2018 2019 2020 2021 2022 2023 0 2B -2B 4B -4B 6B

1.2 Ratios

Looking at the Return On Assets, with a value of 4.32%, FFH belongs to the top of the industry, outperforming 84.15% of the companies in the same industry.
FFH's Return On Equity of 17.51% is amongst the best of the industry. FFH outperforms 84.15% of its industry peers.
With a decent Return On Invested Capital value of 5.11%, FFH is doing good in the industry, outperforming 73.17% of the companies in the same industry.
The Average Return On Invested Capital over the past 3 years for FFH is in line with the industry average of 2.95%.
The 3 year average ROIC (3.84%) for FFH is below the current ROIC(5.11%), indicating increased profibility in the last year.
Industry RankSector Rank
ROA 4.32%
ROE 17.51%
ROIC 5.11%
ROA(3y)4.27%
ROA(5y)3.16%
ROE(3y)18.93%
ROE(5y)14.33%
ROIC(3y)3.84%
ROIC(5y)2.69%
FFH.CA Yearly ROA, ROE, ROICFFH.CA Yearly ROA, ROE, ROICYearly ROA, ROE, ROIC 2015 2016 2017 2018 2019 2020 2021 2022 2023 0 5 -5 10 15 20

1.3 Margins

FFH has a Profit Margin of 10.76%. This is comparable to the rest of the industry: FFH outperforms 43.90% of its industry peers.
FFH's Profit Margin has improved in the last couple of years.
The Operating Margin of FFH (14.61%) is worse than 95.12% of its industry peers.
FFH's Operating Margin has improved in the last couple of years.
Industry RankSector Rank
OM 14.61%
PM (TTM) 10.76%
GM N/A
OM growth 3Y140.87%
OM growth 5Y73.86%
PM growth 3Y138.85%
PM growth 5Y43.78%
GM growth 3YN/A
GM growth 5YN/A
FFH.CA Yearly Profit, Operating, Gross MarginsFFH.CA Yearly Profit, Operating, Gross MarginsYearly Profit, Operating, Gross Margins 2015 2016 2017 2018 2019 2020 2021 2022 2023 0 5 -5 10 15

3

2. Health

2.1 Basic Checks

With a Return on Invested Capital (ROIC) below the Cost of Capital (WACC), FFH is destroying value.
There is no outstanding debt for FFH. This means it has a Debt/Equity and Debt/FCF ratio of 0 and it is amongst the best of the sector and industry.
FFH.CA Yearly Shares OutstandingFFH.CA Yearly Shares OutstandingYearly Shares Outstanding 2015 2016 2017 2018 2019 2020 2021 2022 2023 5M 10M 15M 20M 25M
FFH.CA Yearly Total Debt VS Total AssetsFFH.CA Yearly Total Debt VS Total AssetsYearly Total Debt VS Total Assets 2015 2016 2017 2018 2019 2020 2021 2022 2023 20B 40B 60B 80B

2.2 Solvency

The Debt to FCF ratio of FFH is 4.17, which is a neutral value as it means it would take FFH, 4.17 years of fcf income to pay off all of its debts.
The Debt to FCF ratio of FFH (4.17) is worse than 76.83% of its industry peers.
A Debt/Equity ratio of 0.48 indicates that FFH is not too dependend on debt financing.
FFH has a Debt to Equity ratio of 0.48. This is in the lower half of the industry: FFH underperforms 69.51% of its industry peers.
Industry RankSector Rank
Debt/Equity 0.48
Debt/FCF 4.17
Altman-Z N/A
ROIC/WACC0.74
WACC6.87%
FFH.CA Yearly LT Debt VS Equity VS FCFFFH.CA Yearly LT Debt VS Equity VS FCFYearly LT Debt VS Equity VS FCF 2015 2016 2017 2018 2019 2020 2021 2022 2023 0 5B 10B 15B 20B

2.3 Liquidity

FFH has a Current Ratio of 0.52. This is a bad value and indicates that FFH is not financially healthy enough and could expect problems in meeting its short term obligations.
Looking at the Current ratio, with a value of 0.52, FFH belongs to the top of the industry, outperforming 80.49% of the companies in the same industry.
A Quick Ratio of 0.52 indicates that FFH may have some problems paying its short term obligations.
With an excellent Quick ratio value of 0.52, FFH belongs to the best of the industry, outperforming 80.49% of the companies in the same industry.
Industry RankSector Rank
Current Ratio 0.52
Quick Ratio 0.52
FFH.CA Yearly Current Assets VS Current LiabilitesFFH.CA Yearly Current Assets VS Current LiabilitesYearly Current Assets VS Current Liabilites 2015 2016 2017 2018 2019 2020 2021 2022 2023 500M 1B 1.5B 2B 2.5B

2

3. Growth

3.1 Past

The earnings per share for FFH have decreased by -7.08% in the last year.
Measured over the past years, FFH shows a quite strong growth in Earnings Per Share. The EPS has been growing by 18.21% on average per year.
EPS 1Y (TTM)-7.08%
EPS 3Y9.62%
EPS 5Y18.21%
EPS Q2Q%-4.63%
Revenue 1Y (TTM)N/A
Revenue growth 3YN/A
Revenue growth 5YN/A
Sales Q2Q%-20.01%

3.2 Future

Based on estimates for the next years, FFH will show a very negative growth in Earnings Per Share. The EPS will decrease by -10.20% on average per year.
The Revenue is expected to grow by 12.17% on average over the next years. This is quite good.
EPS Next Y-3.16%
EPS Next 2Y3.32%
EPS Next 3Y-21.82%
EPS Next 5Y-10.2%
Revenue Next Year9.33%
Revenue Next 2Y7.45%
Revenue Next 3Y14.94%
Revenue Next 5Y12.17%

3.3 Evolution

The EPS growth rate is decreasing: in the next years the growth will be less than in the last years.
FFH.CA Yearly Revenue VS EstimatesFFH.CA Yearly Revenue VS EstimatesYearly Revenue VS Estimates 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 10B 20B 30B
FFH.CA Yearly EPS VS EstimatesFFH.CA Yearly EPS VS EstimatesYearly EPS VS Estimates 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 0 50 100 150

4

4. Valuation

4.1 Price/Earnings Ratio

FFH is valuated reasonably with a Price/Earnings ratio of 9.06.
Based on the Price/Earnings ratio, FFH is valued more expensive than 84.15% of the companies in the same industry.
FFH's Price/Earnings ratio indicates a rather cheap valuation when compared to the S&P500 average which is at 30.19.
The Price/Forward Earnings ratio is 9.36, which indicates a very decent valuation of FFH.
Based on the Price/Forward Earnings ratio, FFH is valued a bit more expensive than 60.98% of the companies in the same industry.
When comparing the Price/Forward Earnings ratio of FFH to the average of the S&P500 Index (23.58), we can say FFH is valued rather cheaply.
Industry RankSector Rank
PE 9.06
Fwd PE 9.36
FFH.CA Price Earnings VS Forward Price EarningsFFH.CA Price Earnings VS Forward Price Earnings ChartPrice Earnings - Forward Price Earnings PE FPE 10 20 30

4.2 Price Multiples

Based on the Enterprise Value to EBITDA ratio, FFH is valued a bit cheaper than the industry average as 65.85% of the companies are valued more expensively.
Based on the Price/Free Cash Flow ratio, FFH is valued expensively inside the industry as 90.24% of the companies are valued cheaper.
Industry RankSector Rank
P/FCF 12.52
EV/EBITDA 5.97
FFH.CA Per share dataFFH.CA EPS, Sales, OCF, FCF, BookValue per sharePer Share Data Per Share 500 1K 1.5K 2K

4.3 Compensation for Growth

FFH has a very decent profitability rating, which may justify a higher PE ratio.
A cheap valuation may be justified as FFH's earnings are expected to decrease with -21.82% in the coming years.
PEG (NY)N/A
PEG (5Y)0.5
EPS Next 2Y3.32%
EPS Next 3Y-21.82%

5

5. Dividend

5.1 Amount

FFH has a Yearly Dividend Yield of 1.08%. Purely for dividend investing, there may be better candidates out there.
Compared to an average industry Dividend Yield of 4.27, FFH's dividend is way lower than its industry peers. On top of this 87.80% of the companies listed in the same industry pay a better dividend than FFH!
Compared to an average S&P500 Dividend Yield of 2.30, FFH's dividend is way lower than the S&P500 average.
Industry RankSector Rank
Dividend Yield 1.08%

5.2 History

The dividend of FFH has a limited annual growth rate of 1.33%.
FFH has been paying a dividend for at least 10 years, so it has a reliable track record.
FFH has not decreased its dividend for at least 10 years, so it has a reliable track record of non decreasing dividend.
Dividend Growth(5Y)1.33%
Div Incr Years1
Div Non Decr Years19
FFH.CA Yearly Dividends per shareFFH.CA Yearly Dividends per shareYearly Dividends per share 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 5 10

5.3 Sustainability

FFH pays out 10.22% of its income as dividend. This is a sustainable payout ratio.
DP10.22%
EPS Next 2Y3.32%
EPS Next 3Y-21.82%
FFH.CA Yearly Income VS Free CF VS DividendFFH.CA Yearly Income VS Free CF VS DividendYearly Income VS Free CF VS Dividend 2015 2016 2017 2018 2019 2020 2021 2022 2023 0 2B -2B 4B -4B 6B
FFH.CA Dividend Payout.FFH.CA Dividend Payout, showing the Payout Ratio.FFH.CA Dividend Payout.PayoutRetained Earnings

FAIRFAX FINANCIAL HLDGS LTD

TSX:FFH (2/14/2025, 7:00:00 PM)

2070.19

+70.19 (+3.51%)

Chartmill FA Rating
GICS SectorFinancials
GICS IndustryGroupInsurance
GICS IndustryInsurance
Earnings (Last)02-13 2025-02-13/amc
Earnings (Next)04-30 2025-04-30/amc
Inst Owners37.87%
Inst Owner ChangeN/A
Ins Owners3.94%
Ins Owner ChangeN/A
Market Cap47.35B
Analysts78.18
Price Target2280.54 (10.16%)
Short Float %N/A
Short RatioN/A
Dividend
Industry RankSector Rank
Dividend Yield 1.08%
Yearly Dividend12.31
Dividend Growth(5Y)1.33%
DP10.22%
Div Incr Years1
Div Non Decr Years19
Ex-Date01-16 2025-01-16 (15)
Surprises & Revisions
EPS beat(2)1
Avg EPS beat(2)-4.18%
Min EPS beat(2)-25.87%
Max EPS beat(2)17.51%
EPS beat(4)3
Avg EPS beat(4)10.65%
Min EPS beat(4)-25.87%
Max EPS beat(4)50.56%
EPS beat(8)6
Avg EPS beat(8)17%
EPS beat(12)10
Avg EPS beat(12)137.07%
EPS beat(16)13
Avg EPS beat(16)131.14%
Revenue beat(2)N/A
Avg Revenue beat(2)N/A
Min Revenue beat(2)N/A
Max Revenue beat(2)N/A
Revenue beat(4)N/A
Avg Revenue beat(4)N/A
Min Revenue beat(4)N/A
Max Revenue beat(4)N/A
Revenue beat(8)N/A
Avg Revenue beat(8)N/A
Revenue beat(12)N/A
Avg Revenue beat(12)N/A
Revenue beat(16)N/A
Avg Revenue beat(16)N/A
PT rev (1m)1.51%
PT rev (3m)14.91%
EPS NQ rev (1m)9.18%
EPS NQ rev (3m)9.18%
EPS NY rev (1m)-0.29%
EPS NY rev (3m)4.25%
Revenue NQ rev (1m)0%
Revenue NQ rev (3m)0%
Revenue NY rev (1m)0%
Revenue NY rev (3m)-9.84%
Valuation
Industry RankSector Rank
PE 9.06
Fwd PE 9.36
P/S 0.89
P/FCF 12.52
P/OCF 10.86
P/B 1.45
P/tB 1.99
EV/EBITDA 5.97
EPS(TTM)228.51
EY11.04%
EPS(NY)221.29
Fwd EY10.69%
FCF(TTM)165.29
FCFY7.98%
OCF(TTM)190.65
OCFY9.21%
SpS2329.91
BVpS1431.1
TBVpS1041.61
PEG (NY)N/A
PEG (5Y)0.5
Profitability
Industry RankSector Rank
ROA 4.32%
ROE 17.51%
ROCE 6.24%
ROIC 5.11%
ROICexc 5.54%
ROICexgc 8.41%
OM 14.61%
PM (TTM) 10.76%
GM N/A
FCFM 7.09%
ROA(3y)4.27%
ROA(5y)3.16%
ROE(3y)18.93%
ROE(5y)14.33%
ROIC(3y)3.84%
ROIC(5y)2.69%
ROICexc(3y)4%
ROICexc(5y)2.8%
ROICexgc(3y)5.44%
ROICexgc(5y)3.82%
ROCE(3y)4.68%
ROCE(5y)3.28%
ROICexcg growth 3Y166.79%
ROICexcg growth 5Y86.21%
ROICexc growth 3Y172.59%
ROICexc growth 5Y87.11%
OM growth 3Y140.87%
OM growth 5Y73.86%
PM growth 3Y138.85%
PM growth 5Y43.78%
GM growth 3YN/A
GM growth 5YN/A
F-Score4
Asset Turnover0.4
Health
Industry RankSector Rank
Debt/Equity 0.48
Debt/FCF 4.17
Debt/EBITDA 1.76
Cap/Depr 49.28%
Cap/Sales 1.09%
Interest Coverage 250
Cash Conversion 48.65%
Profit Quality 65.95%
Current Ratio 0.52
Quick Ratio 0.52
Altman-Z N/A
F-Score4
WACC6.87%
ROIC/WACC0.74
Cap/Depr(3y)52.42%
Cap/Depr(5y)49.17%
Cap/Sales(3y)1.42%
Cap/Sales(5y)1.45%
Profit Quality(3y)N/A
Profit Quality(5y)N/A
High Growth Momentum
Growth
EPS 1Y (TTM)-7.08%
EPS 3Y9.62%
EPS 5Y18.21%
EPS Q2Q%-4.63%
EPS Next Y-3.16%
EPS Next 2Y3.32%
EPS Next 3Y-21.82%
EPS Next 5Y-10.2%
Revenue 1Y (TTM)N/A
Revenue growth 3YN/A
Revenue growth 5YN/A
Sales Q2Q%-20.01%
Revenue Next Year9.33%
Revenue Next 2Y7.45%
Revenue Next 3Y14.94%
Revenue Next 5Y12.17%
EBIT growth 1Y39.34%
EBIT growth 3Y194.47%
EBIT growth 5Y102.24%
EBIT Next YearN/A
EBIT Next 3YN/A
EBIT Next 5YN/A
FCF growth 1Y425.96%
FCF growth 3YN/A
FCF growth 5YN/A
OCF growth 1Y248.14%
OCF growth 3YN/A
OCF growth 5YN/A