HANOVER INSURANCE GROUP INC/ (THG) Stock Fundamental Analysis
NYSE:THG - New York Stock Exchange, Inc. - US4108671052 - Common Stock - Currency: USD
We assign a fundamental rating of 4 out of 10 to THG. THG was compared to 143 industry peers in the Insurance industry. THG has a medium profitability rating, but doesn't score so well on its financial health evaluation. THG has a correct valuation and a medium growth rate.
1. Profitability
1.1 Basic Checks
THG had positive earnings in the past year.
THG had a positive operating cash flow in the past year.
Each year in the past 5 years THG has been profitable.
In the past 5 years THG always reported a positive cash flow from operatings.
1.2 Ratios
Looking at the Return On Assets, with a value of 2.79%, THG is in the better half of the industry, outperforming 62.24% of the companies in the same industry.
Looking at the Return On Equity, with a value of 14.99%, THG is in the better half of the industry, outperforming 61.54% of the companies in the same industry.
The Return On Invested Capital of THG (3.12%) is better than 62.94% of its industry peers.
The Average Return On Invested Capital over the past 3 years for THG is below the industry average of 4.47%.
The 3 year average ROIC (1.75%) for THG is below the current ROIC(3.12%), indicating increased profibility in the last year.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 2.79% | ||
| ROE | 14.99% | ||
| ROIC | 3.12% |
ROA(3y)1.29%
ROA(5y)1.89%
ROE(3y)7.13%
ROE(5y)9.18%
ROIC(3y)1.75%
ROIC(5y)2.21%
1.3 Margins
The Profit Margin of THG (6.84%) is comparable to the rest of the industry.
In the last couple of years the Profit Margin of THG has declined.
The Operating Margin of THG (9.05%) is comparable to the rest of the industry.
THG's Operating Margin has been stable in the last couple of years.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 9.05% | ||
| PM (TTM) | 6.84% | ||
| GM | N/A |
OM growth 3Y1.9%
OM growth 5Y-0.99%
PM growth 3Y-5.85%
PM growth 5Y-5.09%
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), THG is destroying value.
Compared to 1 year ago, THG has more shares outstanding
The number of shares outstanding for THG has been reduced compared to 5 years ago.
Compared to 1 year ago, THG has an improved debt to assets ratio.
2.2 Solvency
The Debt to FCF ratio of THG is 0.99, which is an excellent value as it means it would take THG, only 0.99 years of fcf income to pay off all of its debts.
Looking at the Debt to FCF ratio, with a value of 0.99, THG is in the better half of the industry, outperforming 63.64% of the companies in the same industry.
THG has a Debt/Equity ratio of 0.28. This is a healthy value indicating a solid balance between debt and equity.
With a decent Debt to Equity ratio value of 0.28, THG is doing good in the industry, outperforming 62.24% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.28 | ||
| Debt/FCF | 0.99 | ||
| Altman-Z | N/A |
ROIC/WACC0.37
WACC8.32%
2.3 Liquidity
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | N/A | ||
| Quick Ratio | N/A |
3. Growth
3.1 Past
The Earnings Per Share has grown by an impressive 765.58% over the past year.
Measured over the past years, THG shows a quite strong growth in Earnings Per Share. The EPS has been growing by 10.31% on average per year.
THG shows a small growth in Revenue. In the last year, the Revenue has grown by 3.52%.
THG shows a small growth in Revenue. Measured over the last years, the Revenue has been growing by 5.41% yearly.
EPS 1Y (TTM)765.58%
EPS 3Y15.11%
EPS 5Y10.31%
EPS Q2Q%69.97%
Revenue 1Y (TTM)3.52%
Revenue growth 3Y6.83%
Revenue growth 5Y5.41%
Sales Q2Q%7.4%
3.2 Future
Based on estimates for the next years, THG will show a quite strong growth in Earnings Per Share. The EPS will grow by 8.33% on average per year.
Based on estimates for the next years, THG will show a small growth in Revenue. The Revenue will grow by 6.56% on average per year.
EPS Next Y7.73%
EPS Next 2Y10.24%
EPS Next 3Y8.33%
EPS Next 5YN/A
Revenue Next Year6.94%
Revenue Next 2Y6.43%
Revenue Next 3Y6.56%
Revenue Next 5YN/A
3.3 Evolution
When comparing the EPS growth rate of the last years to the growth rate of the upcoming years, we see that the growth is stable.
The Revenue growth rate is accelerating: in the next years the growth will be better than in the last years.
4. Valuation
4.1 Price/Earnings Ratio
The Price/Earnings ratio is 11.81, which indicates a very decent valuation of THG.
THG's Price/Earnings ratio is in line with the industry average.
THG's Price/Earnings ratio indicates a rather cheap valuation when compared to the S&P500 average which is at 28.29.
Based on the Price/Forward Earnings ratio of 10.97, the valuation of THG can be described as reasonable.
THG's Price/Forward Earnings ratio is in line with the industry average.
THG's Price/Forward Earnings ratio indicates a valuation a bit cheaper than the S&P500 average which is at 21.32.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 11.81 | ||
| Fwd PE | 10.97 |
4.2 Price Multiples
THG's Enterprise Value to EBITDA ratio is in line with the industry average.
Based on the Price/Free Cash Flow ratio, THG is valued a bit cheaper than 62.24% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 7.13 | ||
| EV/EBITDA | 10.76 |
4.3 Compensation for Growth
The PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates a correct valuation of the company.
PEG (NY)1.53
PEG (5Y)1.15
EPS Next 2Y10.24%
EPS Next 3Y8.33%
5. Dividend
5.1 Amount
With a Yearly Dividend Yield of 2.23%, THG has a reasonable but not impressive dividend return.
Compared to an average industry Dividend Yield of 3.28, THG has a dividend in line with its industry peers.
THG's Dividend Yield is comparable with the S&P500 average which is at 2.51.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.23% |
5.2 History
The dividend of THG decreases each year by -18.55%.
THG has paid a dividend for at least 10 years, which is a reliable track record.
THG has not decreased its dividend in the last 3 years.
Dividend Growth(5Y)-18.55%
Div Incr Years3
Div Non Decr Years3
5.3 Sustainability
29.13% of the earnings are spent on dividend by THG. This is a low number and sustainable payout ratio.
DP29.13%
EPS Next 2Y10.24%
EPS Next 3Y8.33%
157.49
-4.18 (-2.59%)
Chartmill FA Rating
GICS SectorFinancials
GICS IndustryGroupInsurance
GICS IndustryInsurance
Earnings (Last)
Earnings (Next)
Inst Owners89.55%
Inst Owner Change1.4%
Ins Owners0.76%
Ins Owner Change0.66%
Market Cap5.68B
Analysts75
Price Target186.95 (18.71%)
Short Float %1.02%
Short Ratio1.52
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.23% |
Yearly Dividend3.46
Dividend Growth(5Y)-18.55%
DP29.13%
Div Incr Years3
Div Non Decr Years3
Ex-Date
Surprises & Revisions
EPS beat(2)2
Avg EPS beat(2)37.85%
Min EPS beat(2)19.17%
Max EPS beat(2)56.53%
EPS beat(4)4
Avg EPS beat(4)22.22%
Min EPS beat(4)0.55%
Max EPS beat(4)56.53%
EPS beat(8)5
Avg EPS beat(8)-9.14%
EPS beat(12)9
Avg EPS beat(12)-5%
EPS beat(16)12
Avg EPS beat(16)4.02%
Revenue beat(2)1
Avg Revenue beat(2)-0.3%
Min Revenue beat(2)-1.16%
Max Revenue beat(2)0.56%
Revenue beat(4)2
Avg Revenue beat(4)-0.41%
Min Revenue beat(4)-1.76%
Max Revenue beat(4)0.74%
Revenue beat(8)5
Avg Revenue beat(8)-0.53%
Revenue beat(12)8
Avg Revenue beat(12)1.18%
Revenue beat(16)11
Avg Revenue beat(16)1.87%
PT rev (1m)1.99%
PT rev (3m)4.91%
EPS NQ rev (1m)-4.97%
EPS NQ rev (3m)-5.28%
EPS NY rev (1m)-1.05%
EPS NY rev (3m)3.8%
Revenue NQ rev (1m)-0.19%
Revenue NQ rev (3m)1.43%
Revenue NY rev (1m)-0.27%
Revenue NY rev (3m)1.3%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 11.81 | ||
| Fwd PE | 10.97 | ||
| P/S | 0.91 | ||
| P/FCF | 7.13 | ||
| P/OCF | 7.04 | ||
| P/B | 2 | ||
| P/tB | 2.13 | ||
| EV/EBITDA | 10.76 |
EPS(TTM)13.33
EY8.46%
EPS(NY)14.36
Fwd EY9.12%
FCF(TTM)22.08
FCFY14.02%
OCF(TTM)22.36
OCFY14.2%
SpS172.84
BVpS78.85
TBVpS73.89
PEG (NY)1.53
PEG (5Y)1.15
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 2.79% | ||
| ROE | 14.99% | ||
| ROCE | 3.9% | ||
| ROIC | 3.12% | ||
| ROICexc | 3.22% | ||
| ROICexgc | 3.99% | ||
| OM | 9.05% | ||
| PM (TTM) | 6.84% | ||
| GM | N/A | ||
| FCFM | 12.77% |
ROA(3y)1.29%
ROA(5y)1.89%
ROE(3y)7.13%
ROE(5y)9.18%
ROIC(3y)1.75%
ROIC(5y)2.21%
ROICexc(3y)1.8%
ROICexc(5y)2.25%
ROICexgc(3y)2.25%
ROICexgc(5y)2.82%
ROCE(3y)2.19%
ROCE(5y)2.75%
ROICexcg growth 3Y5.67%
ROICexcg growth 5Y0.09%
ROICexc growth 3Y6.4%
ROICexc growth 5Y0.53%
OM growth 3Y1.9%
OM growth 5Y-0.99%
PM growth 3Y-5.85%
PM growth 5Y-5.09%
GM growth 3YN/A
GM growth 5YN/A
F-Score8
Asset Turnover0.41
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.28 | ||
| Debt/FCF | 0.99 | ||
| Debt/EBITDA | 1.39 | ||
| Cap/Depr | 680% | ||
| Cap/Sales | 0.16% | ||
| Interest Coverage | 16.97 | ||
| Cash Conversion | 142.62% | ||
| Profit Quality | 186.76% | ||
| Current Ratio | N/A | ||
| Quick Ratio | N/A | ||
| Altman-Z | N/A |
F-Score8
WACC8.32%
ROIC/WACC0.37
Cap/Depr(3y)335.62%
Cap/Depr(5y)227.22%
Cap/Sales(3y)0.23%
Cap/Sales(5y)0.23%
Profit Quality(3y)595.01%
Profit Quality(5y)434.59%
High Growth Momentum
Growth
EPS 1Y (TTM)765.58%
EPS 3Y15.11%
EPS 5Y10.31%
EPS Q2Q%69.97%
EPS Next Y7.73%
EPS Next 2Y10.24%
EPS Next 3Y8.33%
EPS Next 5YN/A
Revenue 1Y (TTM)3.52%
Revenue growth 3Y6.83%
Revenue growth 5Y5.41%
Sales Q2Q%7.4%
Revenue Next Year6.94%
Revenue Next 2Y6.43%
Revenue Next 3Y6.56%
Revenue Next 5YN/A
EBIT growth 1Y470.34%
EBIT growth 3Y8.85%
EBIT growth 5Y4.37%
EBIT Next YearN/A
EBIT Next 3YN/A
EBIT Next 5YN/A
FCF growth 1Y127.44%
FCF growth 3Y-0.83%
FCF growth 5Y6.06%
OCF growth 1Y122.78%
OCF growth 3Y-0.73%
OCF growth 5Y5.86%